Jean Galea

Currency Conversions: Your Bank VS Currencyfair VS Transferwise

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High street banks are being threatened by leaner fintech companies with better technology that provide a better service at a lower cost. At least we’ve heard that statement many times over the past few years.

Let’s see how that translates into a real life example.

Let’s say we need to convert $100,000 into euros. We’ll pitch a typical high street bank against two well-known currency conversion services: Currencyfair and Transferwise.

I picked two Maltese banks, HSBC and BOV. Here are their advertised rates:

BOV exchange rates

HSBC exchange rates

Currencyfair

Transferwise

Having checked all the rates, let’s have a look at the final results.

Here’s what each Maltese bank will give us in return for our USD:

  • BOV: €87,734
  • HSBC: €87,039

Amazingly, between the two leading banks in Malta, we see a difference of €700 for the same simple service. Pretty bewildering if you ask me. I believe that both banks also charge a fee, although I was unable to locate the pricing for currency conversions on their website.

Let’s move on to the fintechs:

  • Currencyfair: €88,837
  • Transferwise: €88,925

Note that Currencyfair improves on the BOV’s rate by €1,100, and Transferwise by €1,200. You must also keep in mind that I’ve seen banks that provide much worse conversion rates and extra fees for conversion. Even so, the differences between the fintechs and the Maltese banks are pretty impressive, and I, therefore, see it as a no-brainer to go for either Transferwise or Currencyfair for currency conversions.

Bonus: A Clever Hack using the Mintos platform

If I were to suggest an even better move, I would skip all the banks and currency conversion services and use Mintos for my currency conversion needs. Mintos is currently the best European P2P lending platform and I’ve been obtaining upwards of 10% returns per year on my investments there.

You might be wondering what all this has to do with our currency conversion case study.

The thing is, Mintos launched a foreign exchange service on their own platform. You can, therefore, deposit those $100,000 and convert them to euros there. At the time of writing, the rate employed by Mintos for USD to EUR conversions was 0.892818. They also charge a 0.7% fee.

  • Mintos: €88,581

That’s by far better than the banks’ rates, and slightly worse than Transferwise and Currencyfair. However, once your money is on Mintos, why not invest it there? If you don’t want to park your money there as an investment for a long time, just let your money work for you for just one month, then use the secondary market to sell your loans. The secondary market on Mintos is highly liquid, just as an example I know an investor who sold $1m on the Mintos secondary market in just one day recently.

Keeping an average return rate of 10%, which is easily achieved at the moment on Mintos, after parking our newly converted USD to EUR on the platform for a month, we would be able to withdraw the following:

  • Converted currency €88,581 + Returns of 1 month circa €885 = €89,466

That’s the best result of this currency conversion experiment. You could also keep some money invested if you like Mintos and withdraw the rest, or keep the whole amount invested and gain around €8-10,000 per year at the current interest rates.

What’s your take? Let me know in the comments section.

Expat Guide to Spanish Taxation

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One of the most common mistakes expats make is that of not researching the tax situation of their new country before they move there. This can lead to some very bad news further down the road.

Let’s have a look at Spain, which has a lot of taxes that people coming from other countries might not be familiar with. For example, having previously lived in Malta, many of the Spanish taxes were simply new to me and have no equivalent in Malta. There is no property tax, exit tax, or wealth tax there, just to mention a few examples. I’m therefore very glad to have done the research before I moved to Spain because it made me aware of what I was getting into.

Let’s start with the basics, shall we? One of the first things to note is that taxation in Spain affects not only residents but also non-residents. The most classic example of taxation of non-residents is that on income from rental properties that one owns in Spain. Another point of confusion is how to determine whether you’re actually a resident or not for tax purposes.

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Buying a Mattress in Spain

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Here are a few notes I made while researching the purchase of a mattress in Spain. The mattress industry is aimed at confusing customers with excess supply, pushy sales tactics and high prices, so you have to be careful.

  • Do not consider any company that offers a trial period of less than 100 days. For example, Dormity only offers a 30 day trial period.
  • Beware of scammy offers. Dormity tends to have their mattresses always marked down by a huge percentage, in the ranges of 50-80% off. That is purely ridiculous, it’s very obvious that the price of a mattress is not €2,791 but €658 in the first place; there is no need to try to induce a sense of urgency in the customer just because you label the mattress with a huge discount. There are lots of gimmicks in the mattress industry, unfortunately.
  • Go to the shops and talk to the representatives, you’ll easily get an idea which are the good brands. If they just talk about the technical and complex details of the mattresses without talking about you and your needs, just walk away. The representative needs to be 100% focused on you and how you will use your mattress. He should ask you to lie down on various mattresses and check your spine’s alignment as well as discuss other factors such as your preferred sleeping positions and any injuries or problems you have at the moment.

As a guide range the best mattresses cost between 700 and 1000 euros.

If you’re unsure about what size of mattress to buy, check this link and this one.

For more information about the mattress industry read this and this.

The best brands I found:

How to Evaluate Private Real Estate Investment Proposals

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Peer to Peer and crowdfunding real estate platforms are an excellent way to get into the property investment game, and as you get more involved, you are likely to come across private investment opportunities.

By private I mean off-market opportunities that are typically reserved to a much smaller pool of investors and are found through connections in the real estate world. By writing about real estate crowdfunding and talking about it to my friends and connections at conferences, I eventually got in touch with some big players who deal in specific types of property investments.

While the crowdfunding platforms tend to offer a wide variety of properties, such as student housing, new developments, buy-to-sell, buy-to-rent etc, typically the private investment scene tends to be more specific in type and geographical region.

The reason is simple. You will typically find a person or small team who have been working in the industry for many years and have become experts in the market of a particular city or region as well as a specific type of property.

To take Barcelona as an example, I know real estate experts who specialize in obtaining some of the most dangerous and untouchable properties in the city (occupied by squatters, drug dealers, etc), clearing them out and totally refurbishing them to go on and sell for a tidy profit.

Others focus on foreign buyers who tend to be looking for higher-end finishing and specific locations and types of apartments when compared to the local buyers. Since most local developers focus on the local buyers’ needs, there is a niche that opens up that presents nice profits if you manage to meet the high needs of the foreign buyers as well as be able to market to them.

These are real niches with lower competition due to the extra skills needed to succeed. In the first case, you need to be able to know how to deal with very difficult and possibly dangerous people and probably employ people who will do some brute forcing to clear the spaces, and you need to be good at marketing to convince buyers that these black spots are now a great buy.

In the second case, you need to have knowledge of the traits of foreign buyers and speak their language. This will make it much easier to design an apartment for that specific buyer profile as well as know where to market it and then be able to seamlessly tour the apartment with potential buyers and deal with any concerns they might have.

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PayPal Stiffs Sellers With Changes in Refund Policy

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PayPal have announced some changes that will affect their US customers, although we can also expect them to roll this out on a global basis shortly after.

Here are their announced changes. It goes without saying that sellers are livid about the latest changes, as they will start incurring significantly more fees.

  • We’re removing the flat rate pricing for sending money to friends and family members who have PayPal accounts in a country other than the United States and introducing a new variable fee of 5% based on the amount you send with a minimum of $0.99 and a maximum of $4.99 per transaction. We’re also removing any variation depending on the recipient’s country. 
  • We are changing the currency conversion spread to 3.25% over a base exchange rate in situations where you are a sender of money in a PayPal transaction.
  • We’re changing how we treat refunds. If you refund (partially or fully) a transaction to a buyer or a donation to a donor, there are no fees to make the refund, but the fees you originally paid as the seller will not be returned to you.

As you will have noticed, the biggest issue is that when someone requests a refund (which in some businesses happens quite frequently) you, as a seller, will not be refunded the PayPal transaction fee. This is a hard hit for sellers and there are various petitions asking PayPal to reconsider.

Of course, PayPal will totally ignore those requests and go ahead with the changes. The company does not really care what its users think as the bottom line is it still has no serious competition. It’s a maddening situation but PayPal users ultimately have to bear whatever PayPal decides to implement.

Jean Galea

Online Entrepreneur. Global Citizen. Padel Player.
Founder of WP Mayor & WP RSS Aggregator.

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