The dollar isn’t commanding much respect these days, and one way for stressed-out investors to deal with it is with exchange traded funds (ETFs). Walter Updegrave for Money Magazine writes that the dollar recently dropped to an all-time low against the euro, to $1.48. Central banks might be diversifying some of the currency reserves into euros and oil-rich countries in the Persian Gulf are tossing around the idea of no longer pegging their currencies to the dollar. Ouch!
Updegrave cautions an advice-seeker against significantly revamping his portfolio just to guard against a single risk or get in on a big trend. Investors can be better served, he says, by structuring their portfolios so they can thrive in a variety of scenarios. With that, he gives three ways you can help your portfolio survive the dollar’s woes:
- Invest in a foreign currency. There are a number of ETFs tracking a foreign currency that appreciates as the dollar falls. There’s a lot to choose from out there: the Australian dollar, the euro, the Japanese Yen, the Chinese Yuan.
- Invest in gold. The price of gold has a tendency to move opposite the dollar, and lately, it’s been hitting new highs. There are several ETFs that track the precious metal and are up over 25% this year.
- Invest in foreign stocks. There are many, many ETFs that track indexes made up of foreign companies. Adding foreign exposure into your portfolio decreases your dependence on the U.S. market and takes advantage of an increasingly global economy.
Read the disclosure, as Tom Lydon is a board member of Rydex Investments.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.