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How to Diversify Away From the Falling Dollar

Hey Casey-I’ve attended your last 2 retirement [Atlantic Southeast Airlines Pilot] seminars – thanks for holding them – I’ve learned a lot. Anyway, curious with the new brokerage account option, wondering if there’s a way to get out of dollars and in to a foreign currency? Thanks!    Lisa.

Hi Lisa, Yes. You can purchase a foreign currency ETF inside the Atlantic Southeast Airlines brokerage link. The issue I have with this is that you do not actually hold foreign currency, but futures contracts. There are some performance issues with this approach that is very complicated to explain in an email. Another issue is foreign currency funds do not pay you anything in regards to dividends or interest.

A few years ago we researched the best way for everyday investors to benefit from a falling US dollar value. We looked at metals, currency and other alternatives. A surprising option came to light. Through an index fund you can purchase foreign treasuries in their local currencies. This fund is -.95% correlated with the US Dollar, meaning if the USD declines by 1% then the fund gains .95% in value. In comparison gold is much less correlated to the USD than IGOV. This is an iShares product available for purchase through any brokerage account trading under the ticker IGOV. The best part is you get a dividend from the treasury bonds. The current yield is 3.3%. Take a look at their fact sheet attached to this email. For foreign currency index funds take a look at WisdomTree ETFs at www.wisdomtree.com. These funds are actually future contracts but are from a reputable company. 

 

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