July 2018 – One of the best things about becoming an adult is the opportunity you have to earn your own money. And the best thing about earning money is that you can use it to scratch your travel itch.
According to a number of leading travel companies, most young people in their twenties and thirties today have a real desire to combine their love of nature and adventure with their aspirations to see the world, and that means many are seeking out opportunities for new and authentic global travel experiences that go beyond sightseeing trips and package tours.
Some of these custom travel experiences include opportunities to work overseas, trade your talents for food and lodging, or even couch surf to avoid accommodation costs. But while all these options can help you to get away with paying less for your travels, the reality for South Africans is that our weak exchange rate makes any form of overseas trip a pretty big financial investment. So, having a job that pays a regular monthly income isn’t usually enough, on its own, to fund that overseas trip.
So what’s the alternative? Well, according to Catharina Crous, Foreign Exchange Executive for Nedbank, if you’re a young person with dreams of seeing the world, the best thing you can do is to start saving for that dream trip today. And she is quick to point out that if you’re going to be spending foreign currency on your trip, saving up in that currency so that you benefit from its strength against the rand, is a great way to ensure your money goes far – and takes you with it!
Crous says that anyone can save money in a leading global currency, simply by opening a foreign currency account. “While the South African Reserve Bank offers a generous R1 million offshore investment allowance, you certainly don’t need to be a millionaire to benefit from these types of offshore currency investments,” Crous explains, “and “If you’re going to be making a trip to the USA, Europe or the UK, and you’ll be spending money in the currency of any of those regions,” she contends, “it just makes good financial sense to leverage those same currencies to grow your savings before you travel.”
Crous points to the Nedbank Foreign Currency Account as an excellent example of how easy it is to take advantage of a weak rand to grow your overseas spending money. The account allows you to invest funds in any of the three major foreign currencies, namely US dollar (USD), British pound sterling (GBP), or euro (EUR) and, thanks to a low minimum balance requirement and no account maintenance fees, it is an ideal way to get any short-term savings plan off the ground.
“Anyone over the age of 18 with a South African identity number can open a Nedbank Foreign Currency Account with an initial deposit of just 100 USD, GBP or EUR, depending on the currency they want to save in,” she explains, “and they can add to their savings at any time, and as often as they like.”
She says that this makes the Nedbank Foreign Currency Account an excellent way of steadily growing your capital and, at the same time, protecting its value against local currency ups and downs that could otherwise have eaten away the value of your travel savings if the rand weakened before you set off on your trip.
Local withdrawals from the fund require 48 hours’ notice and, by law, these have to be made in rands into a Nedbank transactional account, Crous says. However, she points out that is it then easy to transfer the funds, in the foreign currency, to an account held at an overseas bank if you have one, which means you have access to the local currency of your destination country when you arrive there.
Of course, while a foreign currency account is ideal for growing your international travel savings, Crous points out that it isn’t only meant for this purpose. The potential to grow your money in line with local currency weakness makes the Nedbank Foreign Currency account an excellent way of saving towards any objective,” she concludes, “but it’s especially useful if you want the financial means to create that perfect, truly epic travel experience that’s as unique as you are.”
The South African Reserve Bank (SARB) allows South Africans over the age of 18 to invest in foreign currency:
- R1 million per year – no tax clearance certificate needed.
- Up to an additional R10 million per year – a tax clearance certificate is necessary.
- Unused travel funds and allowances may not be deposited into a foreign currency account as per exchange control regulations.
- Exchange rates are not fixed – the current rate will be charged at the time of the transactions.
- Two-day notice is needed to access your funds.