Fast moving currency exchange rates can make all the difference to the spending power of expats.
Predicting the ups and downs of a pension paid in sterling against other major currencies is not easy for the professionals.
Keeping an eye on the risks that can boost or drive the pound into oblivion and make or break a tight budget is a nightmare for someone on a fixed income.
Some tactics are easy to identify to make money go further for expats.
Shopping around for the best exchange rate deal rather than sticking with a bank is one strategy for every expat.
Headline exchange rates are not the only number to watch.
Fixing the exchange rate
Banks are likely to take much larger commissions for sending money around the world than specialist brokers, so look for the figure that actually ends up in your pocket rather than a rate designed to hook you as a customer.
Multicurrency accounts are also useful, but this can work out expensive and not all offshore banks and building societies offer the facility.
Thousands of British expats end up in Spain, France or Italy, so often the key exchange rate is the pound to the euro.
Some brokers offer to fix rates for periods between a few months up to two years, but guessing how currencies will move against each other over such a long period is a lottery that can make you richer or poorer at a stroke.
Take the sterling against the euro rate for October 31, 2013. Changing £1,000 into euros then would have given an expat 1181.5 euros – and a two year fix would have missed out on the pound rising to worth 1277.2 euros a year later and seen spending power jump to 1351.8 euros in October 2015.
That’s exchanging £1,000 at the headline rate and not taking any charges or commission into account.
If the cash is coming out of a pension, transferring the fund into a Qualifying Recognised Overseas Pension Scheme (QROPS) might help.
QROPS pay out in several major currencies, and denominating a pension in euros means no fluctuating rates or charges.
Unfortunately, this does not help with the State Pension, which is always paid in pounds and cannot be switched into a QROPS.
Not all currency brokers are regulated, so play safe by picking a firm that is registered with the Financial Conduct Authority (FCA) as your money is protected in a special account if the company goes bust holding your cash.