Invest In A Weak US Dollar With These ETFs

I have used a lot of cookie cutter investing computer programs throughout my career, and I can tell you from firsthand experience that most of them are not going to tell you which is clearly the best thing to do with your money right now!

Have 50% of your portfolio in Foreign Investments! All the signs are here! The dollar is on its way to testing its old lows and the world of the weak dollar is here to stay for a while. This also means inflation and we are already starting to see this in oil and other commodities as they move higher.

When it comes to investing you need take advantage of this weak dollar trend, because it has been the trend for nearly 8 years now.  This long term chart shows the dollar though October of 2008, it trades today at 80.

Why will this trend continue?

As the economy recovers and people look to put their money to work for higher returns, the last thing they are going to want is US Dollars. In fact, many major economies like China and Brazil are looking to stay away from the US dollar, because of the incredibly loose monetary policies.  

How to take is advantage of this?

Where most cookie cutter asset allocation investment programs generally recommending about 10% - 15% in foreign stock (depending on risk level)…look to allocate a little more in foreign stock for the equity portion of your portfolio. An ETF like iShares MSCI EAFE Index (EFA) or similar type foreign stock accounts.

In addition, look to allocate to foreign bonds in the fixed income portion of your portfolio. As the dollar weakness trend continues and these monies go overseas they will appreciate on dollar weakness alone. There are not a lot of options for foreign fixed, like other asset classes. Aberdeen Asia-Pacific Income Fund (FAX) is closed end fund.

Many 401k’s do not offer things like, foreign fixed income funds, and foreign stock is usually limited. Looking into things like emerging market fund like iShares MSCI Emerging Markets ETF (EEM) in a Roth IRA may be a great growth opportunity with a hedge against inflation!

Subscribe by RSS Subscribe by Email