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Moving Money: Why you Need an FX Strategy

Political uncertainty, constant changes in the markets, monetary policy decisions, trade war, and the potential impact of Brexit. All these issues will be on your mind as you plan your financial future. It’s because of these risks that Foreign Exchange (FX) is such a valuable tool for actively growing wealth.

That’s why devising an FX strategy – which is built to increase your wealth while minimising risk – is so important, especially if you’re earning income in a foreign currency, investing globally or buying property abroad. Investec’s Private Client FX Dealer, Charles Lesia, explains the importance of knowing whether you need an FX strategy and how to develop it.

1. You’re likely to have some kind of FX need

Despite the current uncertainty around the markets – not just in the UK but globally – there are still opportunities for you to achieve your financial goals. An FX strategy can support that.

It’s likely you’ll encounter FX transactions in one shape or another throughout the course of your day-to-day life. Perhaps you’re exposed to currency fluctuations via your business earnings. Or you’re paid in part or in full – or receive a performance-based incentive – in a foreign currency. Likewise, any time you’re buying real estate or making an investment overseas you’ll be influenced by FX.

The key is working with a partner who understands your needs and can help you achieve your objectives, while managing your risk. FX dealers must be entrepreneurial and willing to think outside the box if they’re going to get the best result for you as a client.

2. FX is a catalyst to achieving your goals

An FX strategy is most useful when it is linked to a particular goal, and the FX service is the mechanism used to achieve that goal. FX should be an enabler, not a disabler.

If you’re looking to purchase a property abroad and decide not to because the pound weakens, then the FX transaction is holding you back from achieving your goals. By partnering with an FX dealer who understands your objectives, you’ll be able to stay up to date on the markets and work with them to spot the right opportunities.

“FX is not a standalone financial tool; it’s one mechanism that will make up a part of your wider financial plan.

3. FX in isolation is not a path to success

FX is not a standalone financial tool; it’s one mechanism that will make up a part of your wider financial plan. As the client you’ll set the goals and then all parties can work together towards those goals.

This means working closely with both your private banker and FX dealer. It means getting everyone around the table early, so you can develop the right approach to your FX needs.

4. FX can’t be a knee-jerk reaction

When is an FX strategy not a strategy? When you’re undertaking transactions based on the morning’s headlines rather than a long-term view of the goals you want to achieve.

Sometimes, the markets can move quickly – at the speed of a tweet – and that can create opportunities. Deciding whether or not to trade on that movement has to come from the FX strategy and the goals you want to achieve.

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Working with experienced experts is increasingly important

Investec Private Bank wants to make foreign exchange simple. Our clients are time poor with competing financial priorities – they need a partner who can help them construct an FX strategy that’s right for their situation.

Most importantly, Private Bank clients have a dedicated FX dealer looking after them. Each dealer proactively manages their clients in conjunction with their private banker. We give our clients ideas for how FX can enable their vision and equip them with the tools to achieve their goals.

Charles Lesia is a Private Client FX Dealer at Investec

The opinions and views expressed in the above article are for general information purposes, they should not be construed as recommendations or advice for any individual nor should any action be taken on account of the information presented.