The current weakness in the Australian dollar presents a great opportunity for Australian Expats to transfer money back home or buy Australian assets. This week, I discuss three financial opportunities the weak Australian dollar presents for Australian Expats.
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The Australian dollar is currently trading at around a 6 year low against the US dollar, the Euro, and the British Pound. If you have accumulated savings in your host country, it is worth considering whether now is the right time for you to send some money back home. Has the Aussie dollar bottomed yet? Many analysts believe it is possible that the Australian dollar could fall another 10 or 20%, but in the end no-one has a crystal ball. As they say, a bird in the hand is worth two in the bush, so my tendency is to lock in the exchange rate now for at least a portion of your savings, or start making regular transfers over a few months to capture any further potential upside (or downside).[av_heading heading=’What could you do with your Australian dollars?’ tag=’h2′ style=” size=” subheading_active=” subheading_size=’15’ padding=’10’ color=” custom_font=”][/av_heading] [av_heading heading=’1. Pay Down Existing Debts’ tag=’h3′ style=” size=” subheading_active=” subheading_size=’15’ padding=’10’ color=” custom_font=”][/av_heading]
You should always prioritise paying down debts that are not tax deductible (eg. credit cards, personal loans, car loans). Those of you that have read my FREE EBook, would also be aware that if you are not an Australian Resident for tax purposes, then any loans used to invest money into the share market are also not tax deductible in Australia while you are a non-resident for tax purposes.
At the time of writing, the Australian sharemarket is near two year lows in Australian dollar terms (and lower in foreign currency terms). My preferred investment vehicle in the sharemarket is Exchange Traded Funds (ETF’s) which track the performance in the underlying index. For example, Vanguard Australian Shares Index ETF (stock code – VAS) tracks the performance of the Australian share market, or Vanguard MSCI International Shares Index (stock code – VGS) tracks the performance of the global share markets. The benefits of ETF’s are that they have very low management fees (relative to actively managed funds), and are traded on the share market.[av_heading heading=’3. Invest in Australian Property’ tag=’h3′ style=” size=” subheading_active=” subheading_size=’15’ padding=’10’ color=” custom_font=”][/av_heading]
Perhaps you are interested in purchasing an investment property, or you want to leverage your current higher “expat” income to purchase your future home back in Australia. I am a big believer that well selected and located Australian residential property in the major capital cities is a good long term investment. While there is lots of talk in the media about booming property prices in Sydney, other major capital cities have not increased in value anywhere near as much. With the fall in the Australian dollar, Australian residential property in many instances has actually fallen in value in foreign currency terms, and this will begin to generate increased interest from overseas buyers.[av_heading heading=’How to Transfer Money Back to Australia’ tag=’h2′ style=” size=” subheading_active=” subheading_size=’15’ padding=’10’ color=” custom_font=”][/av_heading]
I am constantly asked, what is the best way to transfer money back to Australia? While the banks have now made international transfers much easier using internet banking, the reality is the banks continue to charge exorbitant fees and/or offer poor exchange rates. By using an international money transfer service provider you will likely receive in the order of an additional 2% (subject to size of transaction) in Australian dollars on every transfer. And if you are transferring large amounts of money, then this has a substantial benefit to you. I recommend a company called Ozforex (click here) – a company regulated by ASIC in Australia. I discuss your options in more detail in this article Why I stopped using my bank for international money transfers.
Disclaimer : The information contained on this website is intended only as general commentary and does not purport to be comprehensive. No warranty is provided as to the accuracy. It should not be regarded as tax, financial, or legal advice. Remember, the value of an investment can go down as well as up, and you should seek professional advice that considers your personal situation and country of residence before taking action.