Reply to: Money

[Gonzo]

Basically this:
I have a private pension, composed of various investments.
Thinking long term I want to hedge against sterling de-valuation, especially as I intend to retire outside UK.
The UK is still a favorable investment environment for the small investor, even more so IMO if you are British resident but don't live (spend) there.
So I want to wrap up my investments in the usual SIPP / ISA combo, but these offer restrictions on investments and will be in sterling.
So I'm trying to get my head round how de-valuation will effect my investments if it should happen and so learn how best to hedge against this.
As it is brain-twisting I try to use some simple scenarios.

Investing in funds that put their underlying investments outside the UK is the way to do that then.

Of course, if GBP appreciates instead, then you lose out.

[ace00]

"Money". Nope - I am still . Could you elucidate a bit please?

Basically this:
I have a private pension, composed of various investments.
Thinking long term I want to hedge against sterling de-valuation, especially as I intend to retire outside UK.
The UK is still a favorable investment environment for the small investor, even more so IMO if you are British resident but don't live (spend) there.
So I want to wrap up my investments in the usual SIPP / ISA combo, but these offer restrictions on investments and will be in sterling.
So I'm trying to get my head round how de-valuation will effect my investments if it should happen and so learn how best to hedge against this.
As it is brain-twisting I try to use some simple scenarios.

[Gonzo]

As the index is listed in GPB, does that mean the index automatically rises if the pound falls against asian currencies, or does the value of the listed companies remain the same in GPB?

Provided that the companies are listed in asian currencies, then yes, all other things being equal.

I have had a quick look, and this particular index does have some Australian and New Zealand components, their currencies are not gaining against GBP at the moment.

[Gonzo]

And this would then apply if the investment where an ISA? So same scenario, buy a "German companies ISA", goes from 7000£ to 14000£ ? Is it that simple?

In this simplified scenario, then yes it is this simple.

BUT - remember what I said about all other things being equal - in practice there are numerous variables at play, and they don't work in isolation from each other.

[BrilloPad]

*hint - check the title

"Money". Nope - I am still . Could you elucidate a bit please?

[ace00]

here's a question that's bothered me since I started reading this thread. what is it about?

*hint - check the title

[ace00]

Not quite.

Assuming all other things are equal then:

When you buy £100 worth of shares, that is spent on €200 worth of stuff (German companies).

The next day, the stuff is still worth €200, so it is now worth £200, your 100 shares will be worth £200.

And this would then apply if the investment where an ISA? So same scenario, buy a "German companies ISA", goes from 7000£ to 14000£ ? Is it that simple?

[BrilloPad]

here's a question that's bothered me since I started reading this thread. what is it about?

[VectraMan]

On a similar note:

I have an L&G tracker ISA that follows the FTSE Asia Pacific (ex Japan) index. I thought I'd gain if the pound fell, but as it's in pounds I'm not so sure it works like that.

As the index is listed in GPB, does that mean the index automatically rises if the pound falls against asian currencies, or does the value of the listed companies remain the same in GPB?

[Gonzo]

Ok, next:

I buy 100 shares in UK in UKP for 1 UKP each, of an investment fund investing in German companies, trading in Euro, listed on German stock exchange. The investment fund itself is listed on the UK stock exchange and the holdings in UKP.

At the time 1 UKP = 2 euro

In buying 100 shares I spend 100 UKP.

Next day 1 UKP sinks to 1 euro.

Am I right to assume my investment remain at 100 UKP (but the corresponding purchasing power reduces to 100 euro, from 200)?

Not quite.

Assuming all other things are equal then:

When you buy £100 worth of shares, that is spent on €200 worth of stuff (German companies).

The next day, the stuff is still worth €200, so it is now worth £200, your 100 shares will be worth £200.

[ace00]

Ok, next:

I buy 100 shares in UK in UKP for 1 UKP each, of an investment fund investing in German companies, trading in Euro, listed on German stock exchange. The investment fund itself is listed on the UK stock exchange and the holdings in UKP.

At the time 1 UKP = 2 euro

In buying 100 shares I spend 100 UKP.

Next day 1 UKP sinks to 1 euro.

Am I right to assume my investment remain at 100 UKP (but the corresponding purchasing power reduces to 100 euro, from 200)?

[ThomasSoerensen]

Ok, here's a question that's bothered me a while, (simplified scenario):

I buy 100 shares in UK in UKP, of German company listed on German stock exchange. The shares are 1 Euro each.

At the time 1 UKP = 2 euro

So in buying 100 shares I spend 50 UKP.

Next day 1 UKP sinks to 1 euro.

Do my shares then become worth 100 UKP ?

Nice edit

[NotAllThere]

GBP

[ace00]

No, 100 UKP.

That's what I meant (edited post).
This kind of brainism is way out of my league.

[bored]

Yes, 100 UKP.