By: David Johnson
DONALD RUMSFELD famously said: “As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns; the ones we don’t know we don’t know.”
If you can find your way through the gobbledegook, you’ll see that there is, oddly enough, some sanity in Mr Rumsfeld’s ramblings. The sanity is the recognition that we rarely have all the facts to hand and may not even know what to look for in order to get the answers we need.
I often feel that someone who is embarking on a move overseas, or a property purchase in an overseas location, hits Mr Rumsfeld’s unknown unknowns. There are so many things to consider and so many potential pitfalls that most will, inevitably, turn to an expert in each area of their plans to make sure they don’t slip up. The local authority land-grabs in Spain spring to mind as evidence that, even when you think you know about all the unknowns, there are unknown unknowns lurking in the shadows, ready to sneak up on you when you least expect them.
The same could be said of the currency aspects of these moves; most will assume that getting their bank to make the conversion of their funds to the required currency will be simple and devoid of pitfalls. The unknown unknown in this situation is the actual exchange rate that these people will encounter.
The bank will convert their funds at its own exchange rate, which may bear little resemblance to the actual market rate. It may also have even less in common with the best exchange rate available in the week or months which have elapsed while the client had been making their plans. A typical variation in the Sterling – Euro exchange rate might be three or four cents in a month and far more than that in the early part of 2007, when a surprise British interest rate hike drove GBPEUR from 1.46 to 1.54 euros and back again in a matter of six weeks.
That kind of fluctuation is generally missed by those in the throes of migration or overseas conveyancing, because they don’t know that they can buy at the very best exchange rate while actually delaying the exchange of funds for up to two years. Consequently, they only start to take notice of the exchange rate once they are absolutely ready and that, as Murphy’s Law will tell you, is never going to be the best time to trade.
So, getting to know the unknowns is really a matter of getting to know someone who can unravel and clarify what it is that you need to know, and you should ensure you make the best use of your new found ally and their knowledge.
Might I suggest a foreign exchange broker with a private client arm which is geared up for precisely this kind of transaction? And might I suggest you speak to such a person as early in your plans as you can, knowing what I know of what appear to most to be unknown. No-one knows exactly what is on the horizon, but a good foreign exchange dealer can certainly protect you from the worst that can happen and help you take advantage of the best that is available.
Getting to know someone who knows about the unknowns is definitely a tactic you should know about.
David is a Foreign Exchange Dealer with Halo Financial Ltd, saving money, time and hassle for private clients throughout Europe.
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