I have problems saving money due to spending habits.

My idea is to buy foreign currency online and keep the money stashed away until I need it either for an emergency or for another investment.

The reason I think this would be good is that it stops me from easily spending the money but it also provides a potential emergency fund by exchanging the currency at a bank.

Another thing is the novelty of owning foreign currency might improve my outlook on wealth building and cause me to want more of it. So it would be a lot like silver stacking only more liquid and easier to store.

My question is... is there any downside to this? Would time be an issue? If I were to store the currency for more than three years would it still be exchangeable?

  • 2
    Can you add a country tag – Dheer Dec 25 '16 at 9:01
  • I have to second the country tag request! It really is extremely important to be aware of local circumstances in this case. – AndrejaKo Dec 25 '16 at 14:18
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    This sounds like an XY problem. Have you considered opening another account at your same bank and then shredding the debit card and checks? This way you can only makes transfers from it by physically going into the bank which is basically the mechanism that your proposed method uses to discourage you anyways. – Zach Mierzejewski Dec 25 '16 at 14:58
  • Yes I have. But in addition to keeping myself from using the money, the novelty of foreign money might encourage me to save even more. Like silver stacking does for some people. I had initially wanted to do silver stacking but the lack of liquidity and the high volatility is too much. – user51737 Dec 25 '16 at 19:06
  • Will you have future expenses of any kind in the target currency? What is the ratio to your target position? If you're planning a 5k-10k vacation in country X sometime in your life, go for it. – user662852 Dec 25 '16 at 23:28
  • Saving money in any currency means you get no interest/dividends on the savings, which if inflation is greater than zero means you are actually losing value.
  • Add to that casualty risk (fire, theft).
  • Add to that currency conversion costs, which can run to several percent (which is not a small number).
  • Add to that exchange rate risk, though that may also work in your favor; it's hard to predict which direction that will swing.

Basically, all the same reasons you might not want to keep piles of your own country's cash, plus or minus the exchange rate question.

Banks exist for good reasons. You probably want to use them unless you are explicitly playing the exchange rate game -- And if that's what you want, there are probably better ways to do it.

If you need help not touching the money, CDs or other term accounts might give you enough disincentive. Or might not.

  • I forgot to add that I don't trust the banks. But yes I thought about some of what you said. Fire risk -> I could get a fireproof bag for cheap on Amazon. – user51737 Dec 25 '16 at 19:01
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    @user51737 since you're in the United States, the government will guarantee the funds in your account if something happens to the bank. It's much more likely your savings will be lost, destroyed, stolen, etc. if it is at your house. Banks can have some shady practices, it's true, but they are still the safest place to store your savings. – Kat Dec 25 '16 at 19:36
  • "A fireproof bag" -- emphatically not. To protect paper from a typical house fire you want a fire chest certified to at least the 1-hour-at-1700-degrees level, and for countries which have started using plastic bills you may need a media chest, which is much more expensive per unit volume. – keshlam Dec 25 '16 at 22:54

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