Tip 141: Bank and credit card account abroad

I wrote previously about openning a multi currency account to take advantage of differring yields and growth rates from different countries. The volatility in the financial markets will see more opportunities for those who want to leverage on such volatility instead of be affected by them financially. We get affected when we have to transact in foreign currencies, either to pay an education expense, a home mortgage, a holiday trip, a purchase on the Internet. It may seem negligible at first, but if our transactions become more frequent or larger in quantity, the savings can be substantial. The myth that managing many different accounts can cost a lot of time and fees is not necessarily true nowadays. With internet banking and automated direct debit, foreign credit cards can be managed easily. Though, one must already set aside savings for each account so as not to micro manage them all the time. There is a need for vigilance when one deals with foreign currencies with such huge volatility, but with moderation, such action may actually be safer than inaction. Hence, its good to keep active a foreign account overseas even if you have stopped studying or working there.














When I left Hawaii after completing my MBA 4 years ago, I left my USA bank account active and now look back and enjoy the benefits of it. Whenever I get small online income or even consulting revenue in US dollars, I need not wire the amount to a foreign bank account and incur fees and exchange rate losses, but can keep them at my USD account. When the currency exchange rates are favorable, then I make the transfers thereby controlling the value I get. Also, I take joy in using this USD account to give to meet the needs of my aunt, a missionary and have witnessed how God replenishes the account constantly out of my control. Handling various accounts in foreign currency does require one to keep abreast of happenings that would affect currencies so one can attempt to make the best currency exchanges. For instance, the recent North Korean defiance on its nuclear weapon initiatives have resulted in the US dollar strengthening temporarily over other currencies which can be used for one's advantage. Most banks abroad do not do like Malaysian banks do to charge RM10 every 6 months if your account is dormant. Hence, I find it more beneficial to keep the bank accounts active as there will be more foreign currency transactions by anyone in the future as the effects of globalization takes place.















I do agree I sometimes get myself handling too many things/accounts at one time and others may have different preferences, but do share your views.















(Photos show Haruka at Rue Montorgueil, a street lined with patisseries yet taking time to greet Bonjour to a dog, St Paul's church, Sainte-Chapelle, Saint-Jacques Tower and Place de la Bastille).

Tip 114: Remain vigilant A.L.E.R.T. as recession bites

Vigilant is not such a common word and I looked it up and it means to be watchful, alert, observant and attentive for danger or trouble. It was a good advice by Allister Heath in his article entitled, "A tough year looms as recession bites', 23/12/2008 in City A.M., a free daily I got each morning at Canary Wharf. Allister, the editor said, "We must remain vigilant and not assume that the government will make the economy better. It is just as likely to make it even worse." Allister said that governments could be saddled with lots of bad debts, forcing them to print more money and cause inflation even in the midst of a recession, leading banks to charge high rates for lending, causing the whole credit system to crumble and the government to step in to regulate currency and credit in socialist style. He did admit that many of his views could be too pessimistic, but there is much need for vigilance and to expect 2009 to be a tough year and not to underestimate the severity of the recession. I did not want to highlight this earlier, so that this blog post now will gain more acceptance, together with the other posts I blogged before the full blown nature of the recession about the need to S.A.V.E. (17/9/2008) and to be cautiously optimistic (7/10/2008). Even when things look up slightly, one should ensure that the right principles govern our actions such that we do not fall into any trap that we should regret. Such traps such as stock market rebounds, purchasing properties without sufficient savings, making large investments in business without adequate capital or studying the market well, making large financial commitments such as moving to a new country by spending a fortune in children education and accomodations without subsidy from the company. The bottom line is do not be greedy and excessively ambitious without sufficient savings. But, what are practical steps to be vigilant to ensure we are safe? They are actually the same advice that Jesus and the apostles gives to Christians to be vigilant against the enemy Satan, against temptations and against false teachings which is to have sufficient knowledge, be always prayerful and guard against our excessiveness and sinful nature, knowing ourselves well, be contented and not chase after the unnecessary and knowing dangers to avoid. I have coined another acronym A.L.E.R.T. (Acquire knowledge, Learn about ourselves, be at Ease with what we have, Reflect and act slowly, stay clear from the Tempters).

I am not an expert in religion, nor business. Though, I believe we learn more and receive more when we strive to give the little we have, hence this humble attempt to provide tips I find helpful as I reflect. In times of recession, the decisions that we make are especially important since a wrong move causes a greater fall, a slight mistake incurs a larger loss, a bad business strategy would not invite any small profits as would in a boom economy. Hence the need to Acquire knowledge and not trust a single source or from what people say (including my blog). Spend time to read about economics, your work industry, global business, how interest rates and currency would affect your financial decisions, why its important to check on rental yields before buying a property. This will ensure you make decision based on good principles and sound research and not just by following the herd or by your own emotions. It is equally important that we Learn about ourselves and remember how we perform in good times and bad times and be confident about our roles and identity. This will help us to prioritize on what is important taking account of our strengths and weaknesses, understand that we are not the same as others and should not necessarily follow the example of others if we are not ready. The Christian would remember that there is only one example to emulate which is Christ Jesus and that we are sufficiently loved by God that we need not be worried and be making any decisions to receive love through other means. It is hence important to be contented and be at Ease with the things that we have. In fact, we should always be thankful and count our blessings and not chase after unnecessary pleasures. This will ensure our decisions are made without greed or a desire to have more, but on an objective basis. We should instead be slow in making decisions but to spend more time to Reflect on the outcome of the decision so that we may not fall into any excessiveness. Dangerous times are certainly not times to make rash decisions, to gamble in currencies and stocks or any financial instrument without first assessing the options carefully. Last but not least, the need to be in the right crowd of people with a careful outlook of life and to steer away from those who could or would Tempt us to make incorrect decisions or vices. For the Christian, it is certainly times to be praying more, to read the bible and adhere to the teachings to avoid all kinds of vices and sinful habits, to be contented with God and seek to discover the purpose He has for us which is to be a blessing to others. Difficult times are meant for us to consolidate ourselves to reflect, trim away excessiveness and question the need for them, reprioritise based on a better understanding of ourselves and if possible seek after the right path that we may reap blessings when the time is right. It may be a time to think about being a good daddy and husband and how to lay good foundations so we can move forward even in better times. It may seem like a strong message, but the bible says, "Be sober, be vigilant; because your adversary the devil walks about like a roaring lion, seeking whom he may devour." (1 Peter 5:8) There is a time for extra vigilance against temptations and the time is probably now, though ideally we should of course be on guard at all times.

Don't you think each of us need to put extra efforts to be vigilant? In this age of excessiveness, vigilance is less exercised than the instinct to consume lavishly and act quickly. My faithful readers, what do you think?

(Photos show Buckingham Palace, Royal Exchange, the Gherkin and Bank of England, symbols of power, wealth and financial strength of England. Soli Deo Honor Et Gloria, the coat of arms at a gate to St Helen's Place meaning All glory and Honor to God alone, used by a 16th century Spanish mystic and poet St John of the Cross).

Tip 103: Take gains in a volatile market

I have written a little about the current economic climate, investing and a little on currency trading. My readers of course need to judge by themselves what suits their investment needs. As investments are risky, its important to invest with amounts we are prepared to set aside for a long period. Also, its necessary that we know what we are investing in. Some investments could reap high gains when the economic climate is positive, but at times like now are very risky. Its therefore important to understand our investment objectives, our risk appetite and how we would respond in times of volatility when making investment decisions. Also, there are times when we may consider taking opportunities to reap early gains instead of keeping the investment for a long period of time during times of volatility. Of course, we can only take gains when such investment cost is less than the gains we could make as some investment products have high management or surrender fees meant to encourage investors to be long term investors. If we have been monitoring the volatile markets, it may be a good strategy to seize those opportunities to take gains of part of our investments.















Since I have quite a large portion of my savings in Japanese Yen as I am still paying off my home mortgage, I decided to make a few foreign currency deposits whenever the yen is strong instead of earning the almost zero interest from the japanese bank deposits. I would be converting the Japanese yen in stages and not doing them at one lump sum. I monitor the rates regularly and record them down so I would be aware of how much it has risen or dropped against other currencies. This is by no means a way to time markets, but rather as a means to understand the reasons for the ups and downs of a currency by comparing comments of investment or currency analyst. For instance, at every drop of the Australian dollar by a large percentage points, I would have converted my yen and so far I have accumulated quite a big portion of Australian term deposits. As the market is quite volatile, I have made only 2 weeks, 1 month and 3 months terms so I could easily sell the currencies on maturity of those terms. One such opportunity presented itself on November 10 when I made 14,000 yen over a 2 week period on a deposit of 100,000 yen or a yield of 14%. I converted a few of my term deposits but still have quite a few others that I kept to earn interest else, I would realize a loss if I would convert them now. Yet, this strategy is different from a previous one where I kept the deposit for 6 months when the
AUD currency was on a consistent upsurge in beginning 2008. But, I do not think its the right approach not to take quick gains in such volatile markets. It requires more time and concentration to be more vigilant in times of volatility and I think this not only applies to investments. Whenever there are times of volatility and big change, the society rewards those who are constantly on the look out and keep tabs on change. For instance, investors are investing in countries where central banks are more actively changing rates than those who prefer to keep a steady rate. To some extent, we need to be changing with the times as there are times we need to be steady and times we need to evaluate the necessity to make constant changes. And when necessary, take gains when possible. No hard rules - it really depends on our own assessment of volatility and risk tolerance. But definitely, only make such decisions that you can afford making.














(Photos show dau fu fa sold at HKD6.50 (USD0.80), porridge with pork intestines and stomach that are the most smooth I have eaten at HKD24 (USD3) and prawn noodles which are almost similar quality or not as good as those in Malaysia at HKD26(USD3.3)).

Tip 96: Best places to exchange currencies

The best places to exchange foreign currencies are at places where negotiation is allowed. That is because the spread between Buy and Sell for each currency is usually huge and some traders usually would agree to reducing the spread if they are fond of certain currencies. The banks however do not have time to monitor the flunctuations of each currency and decides to increase the spread and transaction cost and pass it over to the customers to bear. So far, I have found Hong Kong to have the best values when you exchange your currency, while Japan and Hawaii to be places where you have to pay more to exchange your currencies. In Tokyo, there are practically no opportunistic traders who would want to make gains trading currencies, besides the fact that Japanese people trust only the banks with their money. The one place I know that offers the best value in Tokyo is at the New Shinbashi building (near the Shinbashi JR train station) where there are plenty of travel agencies arranging travels for tourists and they ended up with a side business of exchanging currencies for these tourists. Though, you can not negotiate the rates with the Japanese. This is the only place in Tokyo that I know of that offers slightly better rates than the banks. In Hong Kong, you can practically find an exchange booth at most street corners and its actually safer to do your transactions as crime rate and theft is lower in Hong Kong than Kuala Lumpur. It may seem trivial, but currency exchange can be quite a substantial cost when you are relocating to another country or having a work assignment of more than 1 month. This is especially so when the volatility of currencies are almost at the highest in this decade currently. The best rates are at money changer booths at Chung King mansion close to Tsim Sha Tsui, Kowloon. Though, I found recently that HSBC bank in Hong Kong (not Tokyo) offers very competitive rates without the need for negotiation. You will need to conduct the exchange then deposit into a foreign currency exchange account and can make a request to withdraw it on the spot. If they do not have sufficient currencies in stock, HSBC only require 3 hours to prepare the requested amount at the branch of your request.
















So far, the Japanese Yen is edging higher and higher as traders decide to unwind their carry trades and sell their foreign investments and bring back the yen to Japan. Other investors seeing this trend also stock up on their yen, knowing that it would be a safe haven currency given the conservative nature of Japanese banks keeping high reserves. Its anybody's guess how long this would last but one sure way is to exchange your currencies in stages instead of doing a 1 time lump sum exchange. It helps when you are constantly monitoring the rates to know whether its at a ceiling price or a bottom price. Of course, if its at a historically low price for a few years, chances are you would not be at such a disadvantage to exchange more of your currencies. An example would be the USD/JPY that has increased to a 13 year low and AUD/JPY at a 6 year low and GBP/JPY at an 8 year low. Hence, the closer you monitor these currencies and do a stage by stage exchange, the more you stand to gain/less you stand to lose. I would have brought more yen out of Japan if not for the need to pay for my home mortgage. Anyway, its good to feel at home eating breakfast this morning - century egg porridge and fried Loh See Fun for a total of HKD13 (USD$1.60). Its been a long time since I would spend on breakfast compared to when I was in Tokyo, but seeing the old Cantonese ladies cook a good meal just makes me feel like spending. Nothing beats old style hawker food versus the premium priced restaurants.





























(Photos: Top - two currency exchange shops at Wanchai, Hong Kong.
Middle - New Shinbashi Building, the best place to exchange currency in Tokyo.
Bottom - my breakfast at a hawker food joint.)

Tip 100 coming up ... the post with prizes ... keep tuning into my blog.

Tip 61: Gain from AUD deposits (Forex)

In one of my previous tips, I mentioned about setting up a multi currency account at your bank to make deposits in currencies other than your home currency especially when deposit interest rate yields are not attractive in your country. Recently in one of my term deposits, I made 16,500 yen (USD$154) on a 5 month deposit placed in Australian dollars on a capital of AUD$2000. Thats a handsome yield of around 9% on my capital for just a period of less than half a year. The gains would have been much higher on term deposits of much higher amounts and if I selected financial institutions that offered better exchange rates and term deposit interest rates with no administration fees. I started the deposit around January 2008 when the AUD/JPY exchange rate was 89 dropping from a high of 112 in July 2007 and from a low of 85 in March 2007. Its amazing that currency fluctuations are so high these days and even if one do not take trading opportunities, one can just keep various currencies that offer good deposit interest yields for safe keeping especially if one plans to use those currencies one day. I took a 3 month term deposit then, which matures in March 2008 and later renewed for 1 monthly deposits 2 times. It would have been more worthwhile to have made a longer term deposit of 6 months to 1 year if one feels the exchange rate has dropped to very attractive levels. Recently when the AUD/JPY exchange rate rose to 103, I decided to just lock in on the profits when the Australian central bank mentioned that the Australian economy may be cooling down. My yield of 20% per annum is mainly due to the AUD strengthening, as my deposit interest was just 7% on the 3 month term and 5% on the 1 month term. It surely is better than putting my deposits in the Japanese banks that offer around 0.2% deposit interest rates. This tip mainly emphasizes the point of surveying financial markets to get the most out of your hard earned money else inflation will ensure your savings gets depleted faster than you would have realized.

Many daddies would frown at the risk of forex trading. I was talking to a daddy who was very excited on his new hobby of trading currencies regularly in amounts of thousands and sometimes even on margin. He was already pretty confident since he made very huge profits which now acts as his capital and he would lose nothing should he faced the risk of huge losses. Also, he has already understood how to make stop losses in trading to minimise the risk of losing too much. This can be too stressful for many daddies. I on the other hand was mainly interested to increase my experience in foreign currency and my financial literacy to ensure I got higher deposit yields for my money and also keep some AUD since I plan to make a move there. With rising prices of almost everything, your money today will buy less things in the future. Many may be confident of their good saving habits, but that amount in the bank may not increase too much if the interest rate yield in your country is low or if your currency value is depreciating. Saving and managing expenses well is not enough for a daddy to maintain financial stability these days. One needs to manage yields on your savings and invest wisely and manage risk so that your money grows, yet has little risk of losing them by knowing various alternatives and actions. Reading about financial news is necessary to know the daily happenings such as whether the central bank is doing a good job in maintaining competitive interest rates and whether your home currency would be rising or falling due to the currencies of different countries affected by their different economic growth and inflation situations. I read bloomberg news daily and its actually not too heavy with many difficult terms provided with definitions. I think one needs to be in the know of the financial markets as the coming years will be very turbulent with rising price of oil and the possibility of a new alternative energy replacing oil and turning the current global economy upside down till we find a balance again. Daddies, hold on tight and ride the waves of a financial storm. But thats what daddies do - be it fishing in rough storms or fighting the wild beasts outside the caves. The way to excel and not be harmed by the storms is by learning how to do it better everytime. Japanese have a term called kaizen - continuous improvement.

Tip 33: Opening a multi money currency deposit

I believe long gone are the days where a daddy just ploughs the fields and bring home daily wages for the family and save them for the future. We live in a world where financial literacy continues to be a necessary survival kit for a volatile and bumpy economic ride till at last the world taste a one world currency regime to bolster optimal globalization. And this further paths the way for the prophecy in the bible of a one world government to be fulfilled. Needless to say, life and medical insurance are an important tool to secure daddy's income as well as unexpected medical costs. But, these days the economies are less stable - thanks to the central banks of large economies who think they are smart enough to give an illusion of a good economy to its citizens. With big disparities in interest rates between countries, big disparities in growth rates between countries with an ever strong ambition to propel growth further in every country, we are seeing a perfect storm building up in the financial markets. Hence, a daddy needs to at least be aware of currency fluctuations and interest rate yields for his savings deposits. More so, when you are living in Japan with a 0.5% savings deposit yield and hence this tip may be more applicable in Japan - but never too early to be prepared for more volatility in your own country.

In Japan, due to an excessive savings culture and a slower growth due to it being a developed country (yet having the third largest GDP in the world - where even a small growth rate results in big income), the central bank kept reducing interest rates to encourage people to lend and now there are stuck in a situation where they can not reduce rates further. Yet, if they increase rates, it threatens to stop growth. So, many Japanese look outside Japan for better yields. This is what is termed as carry trade. Many experts would advise of the situation of the end of carry trades and the yen is indeed increasing in value but not its interest rates. Hence, there is still a need for Japanese to be depositing their savings elsewhere, where the interest rate yields are higher such as 6-8%. To do this, one needs to open a savings account that is linked to foreign currencies. This comes with risk as foreign currencies are very volatile but if you carefully evaluate rates, you will be able to secure yourself against the risk. Not doing anything at all puts you at risk as well, since the currency you are saving at has a chance of reduction in value too. And if the interest rate yields are very low - you end up having low savings when you leave the country. Hence, I have been following the trends of the AUD Australian dollar. It has strong fundamentals with Australia being an exporter of commodities, metals and minerals and the interest rate yields are one of the highest in the developed world. Its true that the carry trade may end some day but for now, there is still a strong reason to be putting your deposits at countries offering good interest rate yields and for now its Australia. Of course, I observe the exchange rates daily and only renew my AUD term deposits at good exchange rates and if the AUD strengthens too much, I begin to make shorter term deposits with a likelihood of redeeming the deposits back to yen at the right time. Else, I will just use the Aussie dollars when I do move over to Australia since their homes have bigger land than small crampy Tokyo. What do we have next? A hedge against oil prices?