How often should you send money home

Sending money overseas has become a common practice, whether it is for personal or business reasons. However, the decision to send a large sum once or twice a year or smaller amounts more frequently can have significant advantages and disadvantages. In this post, I will compare the advantages and disadvantages of both options.

Advantages of Sending Large Sums Overseas

One of the primary advantages of sending a large sum of money overseas is that it can be more cost-effective in terms of fees. Some money transfer companies offer discounted rates for large transfers, which can result in lower fees compared to smaller transfers. Additionally, sending a large sum of money can be more convenient and time-efficient, as it requires fewer transactions and can be completed in one go.

Another advantage of sending large sums of money is that it can be more efficient for large purchases, such as buying a property or making a significant investment. In these cases, sending a large sum of money can provide a better exchange rate, reducing the overall cost of the transaction and saving you quite a bit of time.

Disadvantages of Sending Large Sums Overseas

Despite the advantages of sending large sums of money, there are also significant disadvantages to consider.

One of the primary disadvantages is the risk of currency fluctuations. Sending a large sum of money can expose the sender to significant losses if the exchange rate changes unfavourably before the transfer.

Other disadvantages include:

Increased scrutiny: Large transfers are more likely to attract the attention of authorities, particularly if you're sending money to a high-risk country. This can lead to delays in processing the transfer or even the seizure of the funds.

Limited options: When transferring a large sum of money, you may have limited options for money transfer providers. This is because some providers have limits on the amount of money that can be transferred in a single transaction.

Longer processing times: Large transfers may take longer to process than smaller transfers, particularly if there are any issues with the transfer or if additional documentation is required.

Advantages of Sending Smaller Sums Overseas

Sending smaller sums of money overseas can also have significant advantages. One of the primary advantages is that it can be less risky in terms of currency fluctuations. Because smaller transfers are completed more frequently, the risk of significant losses due to unfavourable exchange rates is reduced.

Additionally, sending smaller sums of money typically opens more options as many services have limits on a single transfer amount.

Disadvantages of Sending Smaller Sums Overseas

However, there are also disadvantages to sending smaller sums of money. One of the primary disadvantages is that it can be more expensive in terms of fees. Many money transfer companies charge a flat fee per transaction, which can result in higher fees for smaller transfers.

Another disadvantage is that sending smaller sums of money can be less efficient for large purchases or investments. In these cases, it doesn’t make sense to split the transfer into many small transfers.

Conclusion

Overall, assuming flat fees for transfer service, the cost of transferring your money overseas is similar, whether you decide to perform the transfer once a year or do this every month. Consider services like CurrencyFair or Wester Union for example. If you send 10000AED, the transfer fee will be only around 0.1% of the sum. Considering the fact that currency price fluctuation can be 6% in a single month, this is a very small price to pay for the convenience of having the money transferred frequently and therefore reducing the risk of making a very large transfer during the time when the market rate is unfavourable.

In conclusion, while sending large sums of money overseas can have some advantages in terms of lower fees and convenience, it also carries significant risks in terms of currency fluctuations. On the other hand, sending smaller sums of money can be less risky and the cost of doing these transactions is not significantly higher (assuming the transfers are not done too often).

Ultimately, the decision to send a large or small sum of money overseas depends on individual circumstances and priorities. However, it is important to recognize that flat fees are only a small contribution to the overall expense and should not be the primary factor when deciding on the amount to send.

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