Things to remember when you move your home base
When you live overseas as an expatriate, a single currency might not usually be sufficient for your every day needs. Your home currency may not be accepted as regular tender at most locations. In such cases you will have to pay a money exchange fee for every transaction if you use your home plastic card like a debit or credit card. In many places, your employer might agree to pay you in two different currencies in order to mitigate the problem. You could go for a 70-30 mix where a larger portion of the salary is paid in the local currency and the lesser part with your home currency. However, many third world locations or odd jobs would not be able to give you this luxury.
If you are not able to enjoy this benefit, you can go for an account where you can hold two currencies within the same account. In many European destinations, you can hold a current account in the local currency or the euro and have a dollar account along with it. This will reduce the charges you incur in making money exchange transactions. Most transactions on the internet are in dollars and you will incur unnecessary charges whenever you make a purchase with your local currency. You can also open a euro account from an overseas destination in order to build an asset base in that currency before making the move to that destination in Europe.
If your bank does not allow you to hold a multi currency account, you can open accounts in different countries with different banks. It helps to own a credit card with each bank in a different country. This way, if you are a frequent traveler you can avoid transaction costs like exchange fee or bank charges whenever you make a purchase.
Investment diversification is an important aspect of moving to a different country. You need to start building an asset base with a different currency. The fact that you have moved to a different country with a different currency will now work in your favor as you can build a new portfolio while maintaining your old one. Even if one of the currencies falls, you can always rely on the other investment to rest up on when you reach a senile age.
According to investment portfolio theory, in order to reduce risk and increase returns you need to diversity your asset classes and also the types of assets. Apart from currencies, you can go for real estate or gold as a universal investment option in order to improve your asset diversification. Your local bank in the new destination can provide you with interesting investment options like money market accounts or certificates of deposits in the local currency. The rate of return will vary obviously due to the fact that the local market might be performing differently in comparison to your mother country.
Making mortgage payments with a foreign currency can always give rise to unpleasant results. If the currency of your income falls against the currency with which you borrowed money for your home, your repayment planning will get muddled up. Try seeking external advice if you find yourself in such a situation. But moving to a country where the currency is falling in the first place is a bad idea. But if you do end up in this situation, try asking your employer for the multi currency payment pattern. If this does not work, you can always resort to spending all your savings on a reliable certificate of deposit with a long term in your home country in order to be able to pay off the mortgage. Your overseas account will not be able to do much if the local currency falls against your mortgage payments.
