Personal Finance

4296 readers

2 users here now

Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. Join our community, read the PF Wiki, and get on top of your finances!

Note: This community is not region centric, so if you are posting anything specific to a certain region, kindly specify that in the title (something like [USA], [EU], [AUS] etc.)

founded 2 years ago

MODERATORS

WandererLagomorph799@lemmy.ml

nieceandtows@programming.dev

nieceandtows@lemmy.ml

Dedollarization (lemmy.world)

submitted 3 days ago by Ersatz86@lemmy.world to c/personalfinance@lemmy.ml

6 comments fedilink hide all child comments

It seems as though the endgame to all of the political chaos we are experiencing in the US is the dethroning of the dollar as the world’s reserve currency. Putting aside for the moment the question of why or whom might benefit from such an outcome, what is the best way to play defense if your wealth is dollar-denominated?

you are viewing a single comment's thread
view the rest of the comments

[–] dhork@lemmy.world 3 points 3 days ago* (last edited 3 days ago) (2 children)

What you are really asking is whether you should hedge your US-based investments, anticipating a dramatic fall in the value of the dollar. But even if governments and large corporations start keeping reserves in Euro or other currencies, that doesn't automatically mean the dollar tanks.

You could find a fund that specifically invests in non-US companies. Take note of the fees associated with these, since they will be higher than bog-standard index funds. I wouldn't go nuts and put all your eggs there, though. Take a portion of your overall net worth to bet against America, but don't use it all. It is possible that the global economy decides that the business-friendly Trump policies have enough value to put up with all the chaos, and the dollar might even get stronger.

Always remember as a an investor, you are a small fish, in the same tank as the sharks. You will be shark food eventually. Your goal is to simply survive by not being the slowest fish in the tank.

Someone else in this thread offered Crypto as an option. It certainly seems attractive with the current regulatory environment. But make sure that you understand what you are buying if you go that route. There is a difference between an established currency with its own blockchain and governance, and some random President's shitty token which took no effort to set up and whose market can be tanked by manipulators whenever they want. If you are not interested in the difference, stay far away.

[–] Ersatz86@lemmy.world 2 points 3 days ago (1 children)

Thoughtful and thought-provoking response.

I think we agree that the process will be a gradual one rather than a series of lightning strikes (although the rapid erosion of both hard and soft power, economic and otherwise, over the last few months is discouraging), and certainly as you point out, of the value of the dollar may not correlate with its supremacy as a reserve. Furthermore, precedent, most notably with the British pound’s dethroning as the world’s reserve currency, and subsequent resilience in spite of same, reinforces your point.

I would happily research any further specific suggestions you might have as far as hedging and diversification.

[–] Ushmel@lemmy.world 2 points 1 day ago* (last edited 1 day ago)

You can invest in foreign funds, but some of them are US currency hedged to help reduce the effect of the exchange rate(s) which will somewhat counter what you're trying to do. I don't know much about this, but keep it in mind when researching funds, especially foreign bond funds.