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Costs of Sending
There are fixed costs of sending – which just subtract from your overall return. Sending a smaller amount means that your fixed costs form a higher portion of your total send, which increases your exposure to the arbitrage rate risk.
Below is a summary of the fixed cost calculations.
| Send ZAR | Swift Fee | Send FX | Gross Return ZAR | Nett Return ZAR | Nett Return % | Sending Cost % |
|---|---|---|---|---|---|---|
| R50 000,00 | R430,00 | €2 244,82 | R-1 806,21 | R-1 204,14 | -2,41% | 4,86% |
| R75 000,00 | R430,00 | €3 376,97 | R-1 696,28 | R-1 130,85 | -1,51% | 3,50% |
| R100 000,00 | R430,00 | €4 509,12 | R-1 586,35 | R-1 057,57 | -1,06% | 2,83% |
| R125 000,00 | R430,00 | €5 641,26 | R-1 476,42 | R-984,28 | -0,79% | 2,42% |
| R150 000,00 | R430,00 | €6 773,41 | R-1 366,48 | R-910,99 | -0,61% | 2,15% |
| R175 000,00 | R430,00 | €7 905,56 | R-1 256,55 | R-837,70 | -0,48% | 1,96% |
| R200 000,00 | R430,00 | €9 037,71 | R-1 146,62 | R-764,41 | -0,38% | 1,82% |
| R225 000,00 | R430,00 | €10 169,85 | R-1 036,68 | R-691,12 | -0,31% | 1,70% |
| R250 000,00 | R430,00 | €11 302,00 | R-926,75 | R-617,83 | -0,25% | 1,61% |
| R275 000,00 | R430,00 | €12 434,15 | R-816,82 | R-544,55 | -0,20% | 1,54% |
| R300 000,00 | R430,00 | €13 566,30 | R-706,89 | R-471,26 | -0,16% | 1,48% |
| R325 000,00 | R430,00 | €14 698,44 | R-596,95 | R-397,97 | -0,12% | 1,43% |
| R350 000,00 | R430,00 | €15 830,59 | R-487,02 | R-324,68 | -0,09% | 1,38% |
| R375 000,00 | R430,00 | €16 962,74 | R-377,09 | R-251,39 | -0,07% | 1,34% |
| R400 000,00 | R430,00 | €18 094,88 | R-267,15 | R-178,10 | -0,04% | 1,31% |
| R425 000,00 | R430,00 | €19 227,03 | R-157,22 | R-104,81 | -0,02% | 1,28% |
| R450 000,00 | R430,00 | €20 359,18 | R-47,29 | R-31,53 | -0,01% | 1,25% |
| R475 000,00 | R430,00 | €21 491,33 | R62,64 | R41,76 | 0,01% | 1,23% |
| R500 000,00 | R430,00 | €22 623,47 | R172,58 | R115,05 | 0,02% | 1,21% |
Please see the fixed costs calculations for the detailed breakdown of estimated costs involved in sending.
Examples
Example 1, if you were to send R50k with Investec, the portion of the cost of sending would be ~2%. This is fine if the arbitrage rate is 4-5% when you’ll still get returns of around 2-3%, however, if the arbitrage rate were to drop to 3%, you’d only be making 1% profit.
Example 2, if you were to send out R250k with Investec, the portion of the cost of sending would drop to ~1.1%. Now if the arbitrage rate drops to 3%, you’ll still be making reasonable profit of 1.9%.
Because of this, the recommended minimum amount to send out is R100k, but the realistic minimum amount is R75k. If you’re willing to accept the risk from example 1 above, and possibly break-even on the odd occasion, you’re welcome to, but we don’t suggest it. Please chat to us first to confirm you’re happy with the risk.
There’s also a maximum amount we would recommend, which is R500k. More than this and you’re exposing yourself to the volatility of the arbitrage rate. For example, if you send out a larger amount, you’ll use up a larger portion of your yearly allowance – if the effective arbitrage rate is low, you’ll end up with lower returns. Conversely, you could end up with a high arbitrage rate and then you’d win. Overall, we think it’s best to aim for balance – smaller sends mean a larger spread over the arbitrage rate and a more steady return.
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