Every Dollar Counts

Indeed, the dollar is the international currency because almost every nation, especially the Asians have either cut prices or use dollar as a basis for their local currency’s value which is why most Americans do not feel the decline in dollar.

There is no change in price of the products or materials that we import from them. But if you travel to Europe, you’ll get a real shock at how little the dollar buys these days.

You may wonder, what’s going to happen next? What happen to those dollars that you have worked so hard for? So now, even if the Fed says that inflation is regulated, you still have to be a wise spender and you have to save too.

You might be surprised that in just 24 years at 3 percent annual inflation rate, the purchasing capability of your money will be reduced twice.

To keep the way of living that you are enjoying right now, you need to raise twice as much money for your retirement. You might wonder how on earth you are going to do that.

It would be of help if you consider at least some form of hedge against the possibility of the dollar’s decrease in value in the future.

With this, you may consider gold as a form of hedging but today, it is more convenient to invest into other currencies. Foreign currency futures are traded by speculators but also, there are different investment vehicles to choose from for long term investors.

Most commonly referred to as CD, the foreign currency bank certificate of deposit is a type of investment. In here, you wouldn’t be bothered to open another account in a foreign bank just to convert your dollars into Euros, pounds or yen.

There are online sites that offer denominations of different currencies wherein you can see a variety of FDIC insured certificates of deposit.

In investing in a foreign bank, the earnings that will be received there would be the same with the interest. 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. The minimum required investment for this is $ 10,000.

A type of investment is foreign currency ETFs which I will be talking about now. This type of investment is being valued through the assets inside the fund and also, this is a new form of exchange traded fund and also is a listed security.

The assets that are indicated here can be a one currency ETF such as British pound, euro and other form of currencies. These shares are simply traded in the NYSE or Amex wherein it’s as if you own a currency in a foreign money market account.

Investing in currency mutual funds would also be a wise choice. Directly investing in hard currencies is also an option but you have to be focused in this certain type of mutual fund. This is the no load fund wherein it has over $ 110 million assets today and it only begun in May 2005.

This type of fund aims to provide investors a diversified selection of foreign currencies selected by the manager and changed from time to time. This is perhaps a good thing because in this manner, the investor would be able to invest on a longer basis since he or she is already exposed different investment forms.

Currently the fund has about 43 percent of its assets in the euro, another 16.5 percent in the Canadian dollar, about 10 percent in the Swiss franc and smaller amounts in Swedish, Norwegian, British, Australian and New Zealand currencies, as well as 8 percent in gold.

Aside from investing at a minimum of $ 2,500, what you need to do is to get hold of the prospectus and application form from their website.

You need to think twice when you spend for a dollar. These dollars would come in handy from the time that you retire but hopefully, they’ll be still valuable. This is the awful truth and to be able to avoid this, better hedge in your small ways.