Profit from a Falling Dollar with Foreign Investing

Foreign investing can provide investors with a way to profit from the falling dollar. As the value of the dollar decreases, it makes domestic investments less attractive to investors. At the same time, foreign investing can potentially help investors when this happens. Here are a few things to consider about profiting from a falling dollar with foreign investing.

Falling Dollar

Inflation over the years has led to the value of the dollar decreasing drastically in relation to other currencies. The buying power of the dollar is substantially lower than what it once was. While this might have a negative effect on the economy of the United States as a whole, individual investors can take advantage of this situation to make nice profits. This can be done by investing in commodities, real estate and inflation-protected securities. However, one of the best ways to profit from a falling dollar is to get involved with foreign investing.

How It Works

When you put money into foreign investments, they will benefit when the dollar falls in value. As the value of the dollar decreases, this increases the exchange rate between the dollar and other currencies. For example, let's say that you decided to pursue an investment that required you to convert your money into the British pound. As the value of the dollar decreases, this will increase the value of the pound in relation to the dollar. If your money is in pounds in the investment, when you cash out, you will actually be getting more dollars on the way back. This means that you can make profit from the performance of the stock as well as from the exchange rate when you get your money back.

Foreign Investment

There are many ways that you could potentially choose to get involved in foreign investing. One of the most direct ways is to purchase foreign stock. In order to do this, you may have to open a brokerage account with a foreign broker. You will also have to convert your dollars into the foreign currency in order to fund the account.

Another option that you have is to invest in foreign stock exchange-traded funds, or ETFs. These are investment vehicles that are much like mutual funds except that you can trade them on the stock exchange. With this type of investment, you can rely on a professional money manager to select the individual stocks for the fund. This is much easier on individuals that do not know how to pick stocks in foreign countries. Many times, it is difficult to get information about foreign companies, and allowing a fund manager to handle this aspect for you is a lot easier.

Emerging Markets

Investing in emerging markets is one popular method of foreign investment. There are many areas around the globe that are just now starting to become developed. By investing in these emerging markets, you could potentially realize a huge return on your investment.

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