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Dealing with exchange rates

24 Sep

When is the best time to send money back home?

I am sure that is a question that any remitter ponders on. With the unpredictable rates fluctuating every single day, one does not know how to predict or make a trend out of them.

So how do you make the exchange rate work for you?

Don’t waste time speculating!
An exchange rate is in a way like the stock market, unpredictable, and risky! So anticipating exchange rates is a loser’s game. Currency rates are affected by forces like GDP, inflation, and employment; of which, the average person doesn’t have the ability or information to predict which way a currency is headed.

Instead, use the investing technique of dollar-cost averaging to protect your money.

This basically means sending equal amounts of money home, say once a month, this will ensure that you  gain money when the exchange rate is in your favour; but you won’t lose as much when it’s not, because you won’t be sending that much money home. This technique won’t allow you to maximize your earning potential, but you’ll have peace of mind knowing you won’t be on the losing end of a bad exchange rate.

So in response to that question “When is the best time to send money back home?” I guess the answer to that is “small amounts regularly!”

 
 

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