
Expat Financial Advice: How do I manage currency risk?
When we live back in our home country, managing currencies is all pretty straightforward.
We are paid in our home currency, we pay our bills in our home currency, and most of our investments are likely in our home currency.
In this case, we generally have very little currency risk.
The problem we have as expats, however, is that we have too many choices.
There is our home currency, the currency where we live and work, and then there is the currency of our future expenses, such as retirement, a holiday home, or our children’s university education.
Fortunately, managing our currency risk doesn’t require exotic currency hedging tools.
By following a few simple principles, you can eliminate much of the currency risk from your finances and avoid torpedoing your financial plans.

6 tips for managing expat currency risk
1. Determine your base currency. I.e., the currency of the future liability you intend to fund—whether it is retirement, a home purchase, or education funding.
2. Match currency exposure to your goals. Align the currency exposure of the assets intended to fund each of your goals with the goal’s base currency. For example, if you intend to retire to a country in the Eurozone, try to ensure that your pensions and investments are denominated in Euro.
3. Understand your real currency exposure. Don’t assume it’s the currency on your investment statement or the currency the investment is traded in. This may require some research or advice from your financial adviser.
4. Hedge your fixed income investments. Currency movements can significantly affect the returns of cash and fixed income assets. It’s important to hedge this portion of your portfolio where possible.
5. Diversify your equity holdings. While equity portfolios are less affected by currency swings over the long run, it’s still best to maintain diversification across asset classes, industries, and regions—perhaps with a slight bias toward your future currency needs.
6. Minimise forex costs. When transferring funds between currencies, use low-cost services like
Wise or
Revolut. They typically offer much better exchange rates and lower fees than traditional banks.
Finally, what if you don’t know what currency your future liabilities will be denominated in?
For example, you may be unsure where you will retire or where your child will attend university.
In this case, the best approach is to focus on building a well-diversified investment portfolio.
Diversification preserves your flexibility and prevents you from placing an over-reliance on any single currency region. Once you’ve made a clear decision about your future plans, you can adjust your portfolio accordingly.
📚 Further reading
💱 Frequently Asked Questions: Currency Risk for Expats
What is currency risk for expats?
Currency risk, also known as exchange rate risk, is the possibility that changes in currency values will negatively impact your finances—especially if your income, expenses, and assets are in different currencies.
Why should expats be concerned about currency risk?
As an expat, you may earn in one currency, save in another, and plan future expenses in yet another. Currency fluctuations can erode the value of your savings and complicate financial planning.
How do I determine my base currency?
Your base currency should reflect the currency of your future liabilities, such as retirement expenses, property purchases, or children’s education costs. It helps anchor your long-term financial planning.
Should I always match my investments to my base currency?
Where possible, yes. Aligning your investments to the currency of your future liabilities reduces the risk of exchange rate shocks affecting your ability to fund your goals.
What is the impact of currency on fixed income investments?
Fixed income investments are highly sensitive to currency movements. If left unhedged, exchange rate changes can significantly affect returns, so hedging is often recommended.
Do equities require currency hedging too?
Currency impact on equities tends to smooth out over the long term. A diversified equity portfolio generally does not require aggressive currency hedging, although a slight tilt toward your base currency can help.
How can I reduce forex conversion costs?
Use digital platforms like Wise or Revolut instead of banks. They offer more competitive exchange rates and lower transfer fees.
What if I don’t know where I’ll retire or where my expenses will be?
If your future liabilities are uncertain, focus on global diversification. This spreads the risk across currencies and gives you the flexibility to reallocate later based on future decisions.
Can I hold multiple currencies in one investment portfolio?
Yes. Many international investment platforms and offshore bonds allow you to hold multi-currency portfolios. This can help align your assets with your liabilities more effectively.
Should I speak to a financial adviser about currency risk?
Absolutely. Managing currency exposure requires thoughtful planning, and an adviser who understands cross-border finance can help you build a robust, currency-aligned portfolio.

Ross is a qualified Chartered Financial Planner and Pension Transfer Specialist.
He has been a cross-border financial adviser for 25 years and specialises in helping British expats manage their finances with clarity and peace of mind.
If you would like to have a no strings chat with him, please get in touch.