subject: Top Three Ways on Where to Put Your Money [print this page] Top Three Ways on Where to Put Your Money
Almost every nation in the world especially the Asian countries use dollar to equate the value of their local currencies that is why the decline in dollar isn't that felt by most Americans. This means that the products that we import from them haven't increased in price.
What's going to happen in the near future? How much will those dollars be worth in the years to come? It's better to save today and manage your funds wisely even if the Fed says that inflation is under control.
If inflation rate annually is at 3 percent, within a span of 24 years, what can happen to the purchasing power of your money is that it will be cut in half. Basically, this implies that if you want to keep the life that you have right now, and then better raise twice as much as what you are earning now. You might wonder how on earth you are going to do that.
It's enough to make you consider at least some form of hedge against the possibility that the dollar will be devalued by excess money creation in future years. It is a lot better to hedge your funds by diversifying your investments into other currencies. What speculators trade are foreign currency futures but for those who are more conservative and prefer long term investing, there are other suitable investment alternatives for them.
The short term for foreign currency bank certificate of deposit which is a type of investment instrument is called CD for short. To be able to convert your dollars into other currencies, you don't really have to open an account in a foreign bank. You might be surprised to see that in online websites, FDIC insured certificates are denominated in different foreign currencies.
If you invest in a foreign bank, your earnings there would be the same as the interest that you earn. Once the CD reaches its maturity period, you may then convert them to dollars but choices are, it's either you lose or gain depending if the foreign currency grew weaker or stronger. $10,000 is the price of a minimum investment.
Next thing you might want to know about is foreign currency ETFs. This one is a listed security wherein the value of it is based on the assets inside the fund and this basically is a new form of exchange fund traded in the market. Several currencies or one currency ETF like British pound and euro are what defines assets. The NYSE or Amex is where these shares are traded wherein it would give you the impression that you own a currency in a foreign money market account.
Currency mutual funds are another helpful investment vehicle for you. There is one mutual fund that specializes in investing directly in hard currencies. This type is the no load fund which begun in May 2005 and now, its assets are more than $110 million.
The advantage of this type of fund is that the investor may choose from the wide variety of foreign currencies selected by the manager. With this, the fund becomes suitable for a longer term investor who wants to diversify and expose their investments. You might want to know the statistics in today's funds and that is the 43 percent assets placed in euro, 16.5 percent in the Canadian dollar, 10 percent in the Swiss franc, 8 percent in gold and the remaining 22.5 percent are placed in Swedish, Norwegian, British, Australian and New Zealand currencies. The minimum investment for this is $2,500 wherein you may download the prospectus and application of this from their website or also, you can purchase it from their fund networks.
You need to think twice when you spend for a dollar. For the next years to come, you'll need more than what you need now and hopefully, these dollars would be of value by then. This is the hurtful truth that one needs to accept that is why you need to hedge in your own little ways.
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