Which currency should you measure your portfolio in if you might retire somewhere else?

Last updated 19 October 2026.

Ask someone who has moved country how their investments did last year and you may get two different answers in the same breath. In US dollars, flat. In the currency they spend, up three per cent, or down seven. Nothing in the portfolio changed. The ruler did. If you earn in one currency, live in another and might retire in a third, the currency you measure your portfolio in is a real decision. It changes how you read your returns, how you set your mix, and what you do when you rebalance. This guide sets out the three usual candidates, shows the same portfolio measured five ways using real exchange rates, and ends with a simple method you can apply to your own plan.

This is general information, not financial, tax or investment advice. The exchange rates and interest rates below come from central banks and were checked on 19 October 2026. The people and portfolios are made up.

This piece sits in the Grow section. It pairs with A low-cost portfolio when you are not in one tax jurisdiction (what to hold) and Operating cash vs investment cash when you hold two currencies (what to keep out of the market).

Three candidates for your measuring currency

Candidate	What it tells you	Where it misleads
Home currency (where you grew up, or where your family and passport are)	How your wealth compares with the life you might go back to	If you never go back, it measures a life you are not living
Spending currency (where you live and pay bills now, or expect to in retirement)	Whether the portfolio will cover the costs it is meant to cover	If you are likely to move again, today’s spending currency may not be tomorrow’s
Earning currency (what clients or your employer pay you in)	How your savings compare with your income, and how many months of earnings you have put away	Your earnings stop at retirement. Your spending does not

For most people the answer is the currency of the spending the portfolio has to pay for, which for a retirement pot means the currency you expect to retire in. The rest of this guide is about what to do when that is not settled yet.

The same portfolio, measured five ways

Illustrative arithmetic, real exchange rates. Take USD 100,000 invested in something priced in US dollars, such as a global equity fund listed in dollars, and assume its dollar value did not move at all between 16 October 2025 and 16 October 2026. The table converts that same USD 100,000 into five currencies using the European Central Bank’s euro reference rates for each date (cross rates: the other currency’s ECB rate divided by the USD rate on the same day).

Measured in	16 Oct 2025	16 Oct 2026	Change, with zero change in dollars
US dollar	USD 100,000	USD 100,000	0.0%
Pound	GBP 74,478	GBP 74,989	+0.7%
Euro	EUR 85,844	EUR 88,865	+3.5%
Canadian dollar	CAD 140,527	CAD 141,607	+0.8%
Australian dollar	AUD 153,884	AUD 143,704	−6.6%

A euro spender would say the year went well. An Australian would say it went badly. Both are right about their own lives, and neither is describing the investments, which did nothing. Over a longer window the gaps get wider. From 17 October 2016 to 16 October 2026, the same unchanged USD 100,000 went from GBP 82,304 to GBP 74,989 (−8.9%), from EUR 90,959 to EUR 88,865 (−2.3%), from AUD 131,308 to AUD 143,704 (+9.4%), from CAD 131,281 to CAD 141,607 (+7.9%) and from NZD 140,377 to NZD 176,557 (+25.8%).

That is why the measuring currency matters most to people who hold assets priced in one currency and plan to spend in another. In New Zealand and Australia, for example, the investing platform Sharesies reported in October 2026 that the Vanguard Total World Stock ETF had climbed 15 places on its top-50 list in the September quarter. That fund is priced in US dollars, so a New Zealand holder’s result in New Zealand dollars depends on the exchange rate as well as the shares.

FX drag: the two costs people mix up

“FX drag” gets used for two different things, and they need different fixes.

• Translation swings. The movements in the table above. They are not a cost in the usual sense: they can go either way, and they only become real when you convert. They are a risk, and the way to reduce them is to hold more of what you will eventually need in the currency you will need it in.
• Conversion costs. The fees and rate margins every time money changes currency. These are a cost, always in one direction. A 3% conversion fee, which is what PayPal’s Irish fee page sets for converting balances and payments received, costs GBP 360 a year on GBP 1,000 converted each month (1,000 × 12 × 0.03). The way to reduce them is to convert less often, in larger amounts, through a cheaper route, and never twice when once will do.

Choosing a measuring currency does not remove either cost. What it does is tell you which currency is the “home” one, so you can see which conversions are necessary and which are just noise.

Hedging: the cost depends on interest rates

Many funds offer a currency-hedged share class, which aims to remove most of the swing between the fund’s currency and yours. Hedging is not free, and it is not always a cost. Its price is driven mainly by the gap between short-term interest rates in the two currencies. Roughly, if your currency has lower interest rates than the dollar, hedging dollar assets back into it costs you something each year. If it has higher rates, you can pick up a little. The fund’s own hedging costs come on top.

Here are the central-bank policy rates as checked on 19 October 2026. They are a rough guide to the gap, not the exact rates a fund hedges at.

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Currency	Policy rate	Since	Gap vs the US rate (rough guide)
US dollar	Federal funds target range 3.75–4.00%	17 September 2026	n/a
Pound	Bank Rate 3.75%	Held at the latest decision; next due 5 November 2026	0 to 0.25 points lower
Euro	ECB deposit facility 2.50%	16 September 2026	1.25 to 1.50 points lower
Australian dollar	RBA cash rate target 4.60%	30 September 2026	0.60 to 0.85 points higher

So, at these rates, a euro investor hedging dollar assets would give up something in the region of 1.25 to 1.5 points a year, a sterling investor very little, and an Australian investor might gain a little. Rates move, so these gaps will too. Check the share class’s documents for its actual costs.

Your tax authority has already picked a currency

Whatever you choose for planning, the tax system where you are taxed will measure gains in its own currency, and that can produce a taxable gain in a year your portfolio did nothing in its own currency.

• UK. HMRC’s Capital Gains Manual says that for US shares bought with dollars, the acquisition cost is “the sterling equivalent of the US dollars given at the exchange rate in force at the date of acquisition”, and the disposal proceeds are converted at the rate on the date of disposal. It says HMRC should not accept a gain worked out in the foreign currency and then converted at the end. Sterling movements between the two dates are therefore part of the gain or loss.
• US citizens and residents. IRS Publication 54 (revised December 2025) says: “You must express the amounts you report on your U.S. tax return in U.S. dollars.” For an American abroad, the dollar is the tax ruler even if every bill is paid in euros.

Planning in your spending currency and paying tax in another is normal. Just do not let a gain on your tax return persuade you that your plan is ahead, or the other way round. Our guide to accumulating vs distributing ETFs for non-residents covers the withholding-tax side.

Worked example: Sam, who might retire in Portugal or Perth

Illustrative example. Sam, his holdings and his targets are made up. The exchange rates are real ECB reference rates. Sam is Australian, lives and works in London and earns pounds. He holds USD 60,000 in a global equity fund priced in dollars and GBP 30,000 in a sterling bond fund. He expects to retire either in Portugal (euros) or back home in Western Australia (Australian dollars). Assume, to isolate the currency effect, that neither fund moved in its own currency between 16 October 2025 and 16 October 2026.

Sam measures in	16 Oct 2025	16 Oct 2026	Change
Pounds (earning and current spending currency)	GBP 74,687	GBP 74,993	+0.4% (+GBP 306)
Euros (possible retirement currency)	EUR 86,085	EUR 88,870	+3.2% (+EUR 2,785)
Australian dollars (home and possible retirement currency)	AUD 154,315	AUD 143,712	−6.9% (−AUD 10,603)

Three things follow for Sam.

1. His mix does not depend on the ruler. On 16 October 2026 the equity fund is 60% of the total whichever currency he counts in (GBP 44,993 of GBP 74,993, or EUR 53,319 of EUR 88,870, or AUD 86,222 of AUD 143,712). At any single moment, percentages are the same in every currency. So a rebalancing rule based on the share in equities works the same whatever he measures in.
2. His currency mix does depend on the plan. All of Sam’s safer money is in pounds, a currency he only plans to spend while he works. If he retires in Portugal, a sterling bond fund carries currency risk he does not need in the part of the portfolio meant to be steady. That is the decision the measuring currency actually drives.
3. His progress report depends on the ruler. In euros his year looked good. In Australian dollars it looked bad. Both readings of the same unchanged portfolio are true. He should pick one and use it every year, so he is not tempted to choose the flattering one.

A method when the retirement country is not settled

1. Name the spending the portfolio has to pay for. For a retirement pot, that is retirement spending. Write down the two or three places it could happen.
2. Pick a measuring currency, or a fixed blend. If one place is clearly more likely, use its currency. If not, a fixed blend (say half euros, half Australian dollars in Sam’s case) is a reasonable stand-in. Write the choice down with the date.
3. Hold the steady part in the measuring currency. Bonds and cash are there to be predictable. Holding them in the currency you will spend keeps them predictable in the way that matters. Equities are usually priced in many currencies, so leave them global.
4. Rebalance on percentages, review currency once a year. Set a band for your equity share (for example, act when it drifts five points from target) and rebalance when it is crossed. Once a year, check whether the currency mix of the steady part still matches your plan.
5. Convert on purpose. When you move money between currencies, do it in planned amounts through a route whose cost you know. Our guide to what happens to your brokerage account when you move country covers the practical side if the plan becomes a move.

When the plan firms up, switch the measuring currency and move the steady part over time, rather than all at once on a day the rate happens to be against you.

FAQ

Should I just measure in US dollars, since most of the market is priced in dollars?

Measuring in dollars tells you how the investments did. It does not tell you whether they will pay for your life. If you will spend dollars, it is the right ruler. If not, use it alongside your spending currency, not instead of it.

Does the measuring currency change what I should buy?

Mostly it changes the currency of the steady part (bonds and cash), and whether you hedge. It need not change your equity holdings, which are usually global.

Is hedging always worth it?

No. It reduces currency swings but has a cost or gain that depends largely on interest-rate gaps, which change. At the rates in the table above, it costs euro investors more than sterling investors. Check the share class’s documents for its costs.

What if I really have no idea where I will retire?

Use a fixed blend of the likely currencies, write it down and review it once a year. A rough choice that you stick to beats switching rulers to match the year’s news.

Does my tax return use the same currency?

Not necessarily. The UK computes gains in sterling and the US requires amounts in dollars, as set out above. Ask a tax adviser where you are taxed how currency movements affect your gains.

What this article is not

It is not investment, tax or financial advice, and it does not recommend any fund or provider. It does not cover pension transfers, currency-hedging contracts you arrange yourself, or tax rates. Sam and every portfolio value assume no change in the funds’ own prices, which never happens in practice, so the examples isolate the currency effect only. The exchange rates are ECB reference rates for the dates shown, checked on 19 October 2026, and the policy rates were checked on central-bank websites the same day. Both will change.

Sources

1. European Central Bank: euro reference rates, full history (CSV). USD, GBP, CAD, AUD and NZD rates for 17 October 2016 (USD 1.0994, GBP 0.90485, CAD 1.4433, AUD 1.4436, NZD 1.5433), 16 October 2025 (USD 1.1649, GBP 0.8676, CAD 1.637, AUD 1.7926, NZD 2.0309) and 16 October 2026 (USD 1.1253, GBP 0.84385, CAD 1.5935, AUD 1.6171, NZD 1.9868). Last checked 19 October 2026.
2. Federal Reserve: open market operations. Federal funds target range 3.75–4.00% from 17 September 2026. Last checked 19 October 2026.
3. Bank of England: Interest rates and Bank Rate. Bank Rate 3.75%, held at the latest decision; next decision due 5 November 2026. Last checked 19 October 2026.
4. European Central Bank: Key ECB interest rates. Deposit facility rate 2.50% from 16 September 2026. Last checked 19 October 2026.
5. Reserve Bank of Australia: cash rate target. 4.60% from 30 September 2026. Last checked 19 October 2026.
6. HMRC Capital Gains Manual CG78310: Foreign currency: assets acquired or sold for currency. Acquisition cost and proceeds converted to sterling at the rates on the respective dates. Last checked 19 October 2026.
7. IRS Publication 54 (12/2025), Tax Guide for U.S. Citizens and Resident Aliens Abroad. “You must express the amounts you report on your U.S. tax return in U.S. dollars.” Last checked 19 October 2026.
8. B2B News NZ: Sharesies: savings jump 88% as investor confidence slides (13 October 2026). Vanguard Total World Stock ETF up 15 places on Sharesies’ top-50 list in the September quarter. Last checked 19 October 2026.
9. PayPal Ireland: consumer fees. 3.00% above the base exchange rate for converting balances and payments received. Last checked 19 October 2026.
10. Bankrolled: A low-cost portfolio when you are not in one tax jurisdiction.
11. Bankrolled: Operating cash vs investment cash when you hold two currencies.
12. Bankrolled: Accumulating vs distributing ETFs for non-residents.
13. Bankrolled: What happens to your brokerage account when you move country.

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