Using Foreign exchange to make dosh

zetec452 · 30 Nov 2006 at 13:54

Do you think its worth it? With £1 = $1.9 dollers surely it will come down eventually allowing for some easy money to be made.

Anybody done this?

Jon

iCraig · 30 Nov 2006 at 13:55

You could move to a developing country with all your savings and live like a king. :cool:

Posty · 30 Nov 2006 at 13:56

people make millions by doing this

thepharcyde · 30 Nov 2006 at 13:58

JonRohan said:
Do you think its worth it? With £1 = $1.9 dollers surely it will come down eventually allowing for some easy money to be made.

JonRohan said:
Anybody done this?

Jon

Dollars. Not worth it unless you are talking serious investment and like you say will drop considerately. Unlikely. It’s fluctuated between 1.5 to its current peak for a couple years now.

thepharcyde · 30 Nov 2006 at 14:00

Posty said:
people make millions by doing this

Maybe individuals, but working for a asset management co, ccy investments are neutral against actual returns to be attained by trading equities/Fixed Income units.

If you plan on visiting the states in the near future, then i would say buy some now.

zetec452 · 30 Nov 2006 at 16:19

thepharcyde said:
If you plan on visiting the states in the near future, then i would say buy some now.

I will probably be going for a couple of months in the summer so will get some dollers while they are hot.

I suppose buying 2k's worth of dollers then waiting for it go do down isn't really worth it.

robmiller · 30 Nov 2006 at 16:21

You'd get a better return with shares.

gjrc · 30 Nov 2006 at 16:24

its a dangerous game

warren buffet lost a ton of money just recently betting on the dollar getting stronger.

Amp34 · 30 Nov 2006 at 16:27

thepharcyde said:
Dollars. Not worth it unless you are talking serious investment and like you say will drop considerately. Unlikely. It’s fluctuated between 1.5 to its current peak for a couple years now.

But if you invest in a lot of dollars at this exchange rate then wait a couple of years until they go back to $1.5 (although that may take a while) that means you are making a 25% profit on your investment surely, Pretty damn good and a lot more than you would with shares over that period?

I have always wondered about buying oil, although I dont know how that works, then selling it in a few years. Oil is definitly one thing that will increase in value considerably in the future.

Haircut · 30 Nov 2006 at 16:32

JonRohan said:
Do you think its worth it? With £1 = $1.9 dollers surely it will come down eventually allowing for some easy money to be made.

What makes you so sure it will come down eventually?
If the US housing market collapses it could be $2.20 to £1 this time next year.

What if, even if it does come down, it only move to an exchange rate of $1.80 to £1 after 2 years.
That's barely 5% in 2 years (and that's not taking into account you get less selling the currency than buying it!)

I would advise that if you don't know what you are doing steer clear!
People do make big money by doing it but those people usually work in large banks/hedge funds and are backed by analysts looking into whether it's a good deal or not.

gjrc · 30 Nov 2006 at 16:38

Haircut said:
I would advise that if you don't know what you are doing steer clear!
People do make big money by doing it but those people usually work in large banks/hedge funds and are backed by analysts looking into whether it's a good deal or not.

correct,

these analyst are paid to sit there crunch numbers and predict trends all day every day. if it was as easy as you descirbe it we would all be doing it. the top analysts are also some of the highest paid. getting it right can be about luck but its mostly about knowing everything there is to know about a certain market wether it be currency or commodities

Amp34 · 30 Nov 2006 at 16:39

Very true, the US is in huge debts as well which I assume is making the dollar weaker, thats not likely to change in the near future either, its probably going to get worse.

flump · 30 Nov 2006 at 16:40

Usually the spread and broker fees make the profit a lot less. I would be amazed if you could make any kind of profit with that level of investment in a Cambio!

There are plenty of online forex dealers you can use, but tbh, what is a better deal is to spread bet on USD.

Your thinking is USD will get stronger vs GBP again. Thats fair enough, but if you know the timescale also you can place a spread bet on the exchange rate and get your return tax free.

Is it a wise investment though...well i would say unless you are happy with your economics it's a bit risky. The dollar is weaker and the US defecit large, which means that US goods wil be much cheaper in the US than foriegn. If you know your consumer trends it might be worth a punt on some US Consumer Brands or maybe Manufacturers which will be selling cheaper than the imports...unless inflation bites them of course!

This should in no way be taken as investment advice!

Safe Investment for 2k - a good rate Cash ISA!!!!

zetec452 · 30 Nov 2006 at 16:43

There are no guarantees whether it will go up or down. If its at an all time high then generally buying dollars now isn't a bad thing, its the amount of time you've got to hold onto them to make something back is the problem. Anything less than 20% isn't worth it for me.

Tomorrow the dollar could be pound to pound.

I'm going to the US in the summer anyway so im going grab a few dollars while the goings good.

Haircut · 30 Nov 2006 at 16:58

JonRohan said:
If its at an all time high then generally buying dollars now isn't a bad thing

But why?
You could have looked at Microsoft shares back in late 1990.
They were at an all time high then so it would make sense to sell them as they could only go down right?

Now they are worth around 15 times as much.
It makes no difference whether the price is an all time high, all time low or whatever. Unless you actually know why it is such and think you can predict what will happen next.

Buying or selling because something is high and no other reason will lose you a shed load of money the majority of the time.

CF93 · 30 Nov 2006 at 16:58

Amp34 said:
But if you invest in a lot of dollars at this exchange rate then wait a couple of years until they go back to $1.5 (although that may take a while) that means you are making a 25% profit on your investment surely,

25% over two years equates to only 12% (roughly) a year though (assuming compounding interest.)

By the time you take off fees (2% isn't it? Been a while since I bought or sold any shares!) charged by your broker you're not earning that much. If the fees are 2% and you pay that on both sides (converting to $ then on onverting back again) tbh the return works out about the same as investing in property or a high rate ISA.

zetec452 · 30 Nov 2006 at 17:02

I'm not going to buy loads of USD as I don't have loads of money to be sat in a different currency I can't use here.

However, I was interested to see if poeple had used Foreign currency to make money.

If I was going to invest some dosh I'd probably look at an ISA or one of those higher interest accounts, maybe even property.

Killa_ken · 30 Nov 2006 at 17:08

I used to do this when i was at uni in the UK, made quite the fortune, well, enough to keep me going for a year without needing to work.

I started with about $500 from my student loan and came away with 3K or so.

Good stuff, easy to do so long as your sensible and worth while.

utherpendragon · 30 Nov 2006 at 17:24

nows the time to do it with US interest rates due to be dropped in the new year along with the expected rise over here will surely mean by febuary/march there would be a nice little earner on any exchange.

Seft · 30 Nov 2006 at 17:28

utherpendragon said:
nows the time to do it with US interest rates due to be dropped in the new year along with the expected rise over here will surely mean by febuary/march there would be a nice little earner on any exchange.

That would further devalue the dollar.