Holding cash reserves outside of the dollar

[sakina96]

Like many on this site I am holding a large amount of funds in the form of cash (CDs, Vanguard MM, deposit accounts) in anticipation of needing it in about two to three years when I jump back into the real estate market.

At the same time I’m worried about a falling dollar, particularly if the FED bends under pressure or if this housing/credit markets unravel too quickly resulting in conditions necessitating a rate cut.

Personally I’m not too keen on putting a ton of money in foreign equities since many of these markets (in my uneducated mind) seem to be a slave to the U.S. markets. Also I am not a sophisticated enough investor to feel like I can make the appropriate choices.

That being said, what are other people in this forum doing? Things I’ve wondered about include Hard Currency Funds (like Merk), foreign MM acounts, foreign bonds, precious metals…Thoughts?

[bubba99]

One place to park dollars but tie them to foreign currencies are the foreign exchage traded funds like FXE, FXA etc. These funds trade at exactly the exchange rate times 100.

FXE is in euros and is currently trading at $136.89 and the exchange rate is 136.9/100 euros. Been in and out a couple of times, liquidity does not seem to be a problem. The fund holds euro denominated bonds and makes money on the interest. The stock price is tied directly to the exchange rate.

[bubba99]

One place to park dollars but tie them to foreign currencies are the foreign exchage traded funds like FXE, FXA etc. These funds trade at exactly the exchange rate times 100.

FXE is in euros and is currently trading at $136.89 and the exchange rate is 136.9/100 euros. Been in and out a couple of times, liquidity does not seem to be a problem. The fund holds euro denominated bonds and makes money on the interest. The stock price is tied directly to the exchange rate.

[bubba99]

One place to park dollars but tie them to foreign currencies are the foreign exchage traded funds like FXE, FXA etc. These funds trade at exactly the exchange rate times 100.

FXE is in euros and is currently trading at $136.89 and the exchange rate is 136.9/100 euros. Been in and out a couple of times, liquidity does not seem to be a problem. The fund holds euro denominated bonds and makes money on the interest. The stock price is tied directly to the exchange rate.

[JES]

Is gold a good way to play this?

[JES]

Is gold a good way to play this?

[JES]

Is gold a good way to play this?

[4runner]

E*trade will let you convert currencies (and buy in foreign exchanges) through their global trading platform.

[4runner]

E*trade will let you convert currencies (and buy in foreign exchanges) through their global trading platform.

[4runner]

E*trade will let you convert currencies (and buy in foreign exchanges) through their global trading platform.

[bsrsharma]

I have put all my 401(k) into global/international mutual funds in the last 2 years and I am happier compared to say, previous 5+ years. You may look at a well diversified global index fund. Holding large $ assets now is like buying real estate in 2005-06.

[bsrsharma]

I have put all my 401(k) into global/international mutual funds in the last 2 years and I am happier compared to say, previous 5+ years. You may look at a well diversified global index fund. Holding large $ assets now is like buying real estate in 2005-06.

[bsrsharma]

I have put all my 401(k) into global/international mutual funds in the last 2 years and I am happier compared to say, previous 5+ years. You may look at a well diversified global index fund. Holding large $ assets now is like buying real estate in 2005-06.

[34f3f3f]

If you’ve already got cash reserves outside the dollar, I’d hold onto them. A spread of currencies with the dollar being so weak makes sense. The temptation of course is to convert and reap the benefits, but then your left holding the baby if things go pear-shaped. Some predict the dollar gaining ground late next year. As far as US residents investing abroad, there are restrictions and tax implications.

[34f3f3f]

If you’ve already got cash reserves outside the dollar, I’d hold onto them. A spread of currencies with the dollar being so weak makes sense. The temptation of course is to convert and reap the benefits, but then your left holding the baby if things go pear-shaped. Some predict the dollar gaining ground late next year. As far as US residents investing abroad, there are restrictions and tax implications.

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