| Real Life Strategies for Building Wealth

apartment GOOur regular readers will remember that we have property in Bulgaria which we need to sell – an apartment, a summer garden with little house and some agricultural land.  It belonged to Maria’s parents.  And her sister’s as well of course.

Now we have buyers for all three!

The big sticking point has been that since Maria has been in the UK for over 20 years and has British citizenship, renewing her Bulgarian passport has proved to be so not worth while that she let it lapse.

But to oil the administrative waters, it is better for her to get a Bulgarian passport, even if only for these property transactions.  It appears that local notaries were not aware of changes in legislation which meant that she should be able to transact on her British passport anyway but try telling that to the jobs-worth clerk at the counter!

So Maria will go over next week to get a passport, grab some sun and eat delicious tomatoes.  Yum yum.  And travel to north Bulgaria to seal the deal with the purchaser of the apartment.

We have our own apartment in Sofia and a bank account locally so the funds from selling the apartment plus the land etc can be deposited there – where it will earn a handsome 5% interest or so. Eat yer heart out, Mr ISA!  We need to do some work on our apartment – the windows in particular require attention – but there should be about £25k left over after that.

What should we do with this?  We could ‘repatriate’ the funds here and add them to our Nutmeg account, which will grow hopefully a bit faster.  Or should we leave it in Bulgaria and even send more money over to take advantage of the higher interest there.  Hmm.

Since the UK is not – and I think will never be – in the Euro, this means looking for a good way to exchange currencies.  On the Bulgarian side, their currency board has held the Leva (the Bulgarian currency) constant against the Euro so we can change between Euro and Leva with very little cost.   Exchanging money from sterling directly into Leva would be more costly.

But how much will it cost to send Euros to Bulgaria or vice versa?  Which service to use?

We found one called HiFX which seems to fit the bill.  It’s been around since 1998.  Last year it transacted over £9 billlion and is used by the Post Office among others.

I registered on their website at hifx.co.uk;  I wanted to see just what charges would be made sending, say, a few hundred £, a few thousand £ or more each way.  It is important because not only do banks charge for the ‘administration’ they also have quite a large spread.

A spread is the difference between the cost of buying a currency and the amount for which you can sell back.  Don’t be hoodwinked by stories of a few ‘pips’ (few 1/100ths of a percent).  This is for foreign exchange traders who are gambling.  That’s the advantage of playing with millions of course but with those platforms, you can trade but you can only withdraw money in the same currency that you started with!  That’s not what we want.

This table compares the costs along with those of our bank.  The exchange rates are just for this afternoon of course – any other time they will change so they are illustrative.  In fact the actual rate I would have got had I sent money today would not be exactly the same – these numbers change all the time.

Bureau Amount Buy €,
cost £
Sell €,
get £
Spread Charge
HiFX £100 1.1469 1.1947 4.1% £9
HiFX £3000 1.1583 1.1827 2.1% £0
HiFX £300,000 1.1628 1.1787 1.4% £0
NatWest Any 1.1232 1.2836 14.3% £10

For pretty nearly everything apart from Euros, dollars and a few others, NatWest charges not £10 but £22.  If you are sending any sizeable sum of money, that pales into insignificance anyway compared to their buy/sell rates.    All high street banks are the same and we are generally quite happy with the NatWest – they were very helpful in our time of greatest need – but it really is a no-brainer.

So how does it work?  On the HiFX site, it seems pretty simple.  You set the recipient account and currency and ensure that sufficient money is paid in.  The exact exchange rate will vary slightly from that quoted and the money is sent the next day.  Bingo.  I couldn’t initiate a sausage chez NatWest.  It would have taken a visit to the branch to do anything which would be good for the exercise of course except the local branch is only a few hundred yards away.

In sum, you can save a lot of money using HiFX.  We will be using it as and when necessary, particularly to move larger amounts of money.

How do you move money around?