Interest rates across the World have been slashed in the last 6 months.  For British Expats with money on deposit in Sterling this is a double blow.  Whilst the policy decision to reduce interest rates to near zero is a must in the current economic climate, expats are depending on the interest from their deposit accounts are suffering.

A recent example highlights the problem.

For each £100,000 invested

          In November 2008, you could get £5,800 per annum interest.

          In March 2009, with the same account you get only £950 per annum interest.

Quite devastating.  Unfortunately that is not the end of the story.  Bring your interest into Euros and the situation has changed from

          In November 2008 having 6,960 Euros for your interest

          to

          In March 2009 having only 1007 Euros.

They good news is there are things that you can do to repair the situation. Our Top Tips include:

          Match your investments currency to your expenditure currency. (And don’t be afraid to buy items on the internet in Sterling and have them sent to Spain if you have your money in Sterling. The low rate of Sterling makes this a very good idea)

          Diversify your investments.  Use a portfolio approach.  There are other investments paying much better rates of income.  Yes, some have some risk but a well diversified investment portfolio reduces the risk considerably.

Alternatively, you could keep your fingers crossed that the UK Government is 100% right and that Sterling will go through the roof next month!