4 Ways To Earn From The Losing Value Of Dollar

One morning last week when I was at home surfing some TV channels, I found CNN so I thought of just listening to some ‘bad economy’ news to learn how bad it was then. I really don’t understand much of what they say but they were discussing about the falling value of dollar. Interesting, it thought. I went into the kitchen, got some coffee and placed myself on the sofa.

They started with a discussion of our government’s incapability to handle the recession and its unenthusiastic approach to limit the spending. Bush didn’t do much to control the overall spending nor is Obama able to correct the market situation. I agreed with the old guy on the show. Now I was more interested in the discussion because you know, you feel good when someone is smacking the politicians.

However, they further revealed that the existing debt of our federal government is about $12 trillion and according to the projections, it will reach $22 trillion within next 10 years.

I realized that the young guy was the interviewer and the old guy seemed to be some financial expert. See, even I can derive conclusions. When the interviewer asked him what a common guy could do to help himself getting affected by the economy, the old guy said “Nothing much. Keeping voting every November, listen to some jingoistic speech, and write to them if you have something to say. And yes, you can also silently watch them drag our country deeper into this financial heap of debt.’

Hey, was I wasting my time listening to this stupid guy who was no better than a politician? Within seconds his face turned serious and he asked to viewers to note down 4 important ways by which they can profit from the falling economy. Ok, I thought, let’s see what crap he has to offer now. This is what he said:

1. Foreign Investments

   The depreciation in value of U.S. dollar means it is losing value compared to foreign currencies. So, to gain profits, you can invest in those foreign currencies. This can be done through Forex (Foreign Exchange). However, investing in Forex is quite risky, especially if you are a starter, as the market is extremely volatile. It’s better to invest in foreign stocks rather than Forex as it has numerous other advantages.

   Majority of 401(k) plans and many other retirement plans provided by the employers will include funds with good foreign stocks. Investing in these stocks can reduce your risk of losing money due to poor market conditions and can help you to have a balanced and broad exposure.

2. TIPS

   TIPS means Treasury Inflation Protected Securities. People can invest in TIPS, which are bonds offered by government. This can work well for you in the inflation because the interest rate rises with the inflation index. It is highly recommended that a part of your investment should cover TIPS. These funds are offered by most of the mutual fund companies.

3. Real Estate

   If you think it’s not a safe bet to invest in real estate after this huge sub-prime crises, you are wrong. In long term, real estate prices will soar very high irrelevant of what price you bought it at. Houses can now be purchased with fewer difficulties due to ease in financing and mortgage policies. Moreover, the housing tax credit will help to garnish your investment.

   However, invest in real estate only if you have a good amount of money to put in. Do not try to test your luck by taking a huge mortgage and living in debts for the rest of your life.

   If you don’t want to physically buy the house, invest in Real Estate Investment Funds or REIT. Again, these funds are generally offered by all the mutual fund companies. And remember, this investment is not for those who are looking for short term gains. It will take years for real estate price to hike again. I am advising it because the prices are too low now.

4. Commodities

   No, we are not investing in gold. I know, the price is mounting every minute and people are going haywire on the skepticism. Some years ago, oil lured everyone. Prior to that, real estate was the talk of the year. Who knows what it would be in coming years. Hedge your investments in this inflationary period by diversifying your portfolio. There a various commodities funds, also known as ETF, available in the market. Go for a fund that includes not only valuable metals but also some other commodities.

President Obama doesn’t seem to be quite successful in influencing the Chinese administration. Moreover, the once considered strongest economy (of course US economy) is not much reliable for investors now. To gain profits in this situation, it wise to invest a huge chunk in foreign investments and futuristic prices of real estate and commodities.

Well done, old guy. These tips (not the treasury something something; I am talking about tips as in ‘useful tips’) were simply great for those who invest regularly. I thought it was a wise advice. Comment and let me know what you think about this useful crap.