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12-11-2015, 09:20 AM
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#1
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Recycles dryer sheets
Join Date: Feb 2008
Posts: 78
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Currency
What are people doing regarding diversification of currencies?
Seems like a lot of turmoil in the FX market and keeping all your money in USD is a big risk. Not sure what is best market to diversify into though.
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12-11-2015, 09:28 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Location: Northern Ohio
Posts: 3,182
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As long as I'm paying for everything I need in USD, I'll stick to USD. Anything more seems like pure speculation.
If you need foreign currency for some use (like regular visits to another country) that's another matter.
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12-11-2015, 09:38 AM
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#3
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Full time employment: Posting here.
Join Date: Aug 2015
Posts: 550
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I do not think that any other IMF reserve currency basket currency is in better position than dollar. All of them (Pound, Yen, Euro, Yuan) have similar Central Banks "easy money" policies. I would advise PM (Gold, silver, platinum etc) but during past 2 years they are only going down and not sure where bottom is going to be. So as of now USD is best even if the Feds are going to raise only .125%
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12-11-2015, 09:46 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Jun 2010
Posts: 2,301
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I have 40% of equities in unhedged foreign index funds. I think that is enough for me.
In terms of actual currency spending to meet living expenses, it's almost entirely USD so I don't worry about it much. I might spend a little in CAD and some of my toys (cameras/lenses) also may be affected by USD exchange rates but not enough to do anything.
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12-11-2015, 09:47 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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Quote:
Originally Posted by Bankerwithabrain
What are people doing regarding diversification of currencies?
Seems like a lot of turmoil in the FX market and keeping all your money in USD is a big risk. Not sure what is best market to diversify into though.
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I don't worry much about currency diversification since I pay most stuff in US$
Nevertheless, most of my international mutual funds are unhedged, so that give me some currency diversification.
__________________
Retired since summer 1999.
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12-11-2015, 10:15 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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I have the S&P which is plenty of international exposure for me.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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12-11-2015, 10:21 AM
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#7
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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Quote:
Originally Posted by Bankerwithabrain
keeping all your money in USD is a big risk.
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I don't know why you think that. If you can explain your reasoning, perhaps we can counter that (or not, depending upon your situation).
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12-11-2015, 10:28 AM
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#8
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Recycles dryer sheets
Join Date: Feb 2008
Posts: 78
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Quote:
Originally Posted by DEC-1982
I don't know why you think that. If you can explain your reasoning, perhaps we can counter that (or not, depending upon your situation).
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The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).
The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...
We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.
The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.
I know over the last year USD has strengthened significantly - but this could turn quickly.
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12-11-2015, 10:49 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2007
Posts: 14,328
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I converted all my assets to Bitcoin in 2011. You can't trust currencies subject to national manipulation.
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12-11-2015, 10:58 AM
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#10
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,501
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Quote:
Originally Posted by mpeirce
As long as I'm paying for everything I need in USD, I'll stick to USD. Anything more seems like pure speculation.
If you need foreign currency for some use (like regular visits to another country) that's another matter.
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+1
I'm sort of the buy-and-hold type, rather than chasing yield or speculating. My spending is all in USD. I do have some international funds.
Although I agree that hyperinflation is a risk, I also think everything we invest in has some risk associated with it. I'm not losing sleep over it. Maybe I should.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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12-11-2015, 11:40 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2013
Location: Limerick
Posts: 5,655
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Quote:
Originally Posted by Bankerwithabrain
The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).
The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...
We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.
The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.
I know over the last year USD has strengthened significantly - but this could turn quickly.
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The problem is then entire world pretty much has the same problems as the US or worse. No place to go that is safer.
Sent from my iPhone using Early Retirement Forum
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12-11-2015, 12:34 PM
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#12
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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Quote:
Originally Posted by Bankerwithabrain
The main concern is that the US gets hit with a bout of hyperinflation (or at least serious inflation).
The US economy is very fragile right now - with significant debt burden, less workforce participation, aging workforce, etc...
We also live in a world where tiny changes have huge impacts due to derivatives and hedge funds.
The world is more global now. Even though we live in the US - it seems that owning a basket of currencies diversifies the risk that USD takes a significant hit and everything becomes more expensive.
I know over the last year USD has strengthened significantly - but this could turn quickly.
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1) Most Americans spend most of their money in US dollars. We do import a lot from other countries.
2) What would we put money into?
Euro - With slow growth, worries about Russian intervention, Asian refugees, Greece temporarily forgotten, it hardly seems like a great place to put money into.
China yuan - Their growth is slowing, the money is leaving China, they are selling US Treasuries to try to keep the dollar-yuan somewhat stable, and just about everybody predicts their currency will go down.
British pound - Uncertainty around EU membership, and too much dependence on finance centered in London.
South America - they were doing well off the commodity boom but that seems to be over for the time being, and the big countries, Brazil, Argentina and Venezuela, all seem to be in trouble economically.
I have not thought much these; somebody else can comment on them:
Japan yen
Swiss franc
Mexico peso
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12-12-2015, 07:40 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,941
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Gold and sliver. (I especially like silver at the current prices)
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12-12-2015, 11:59 PM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,588
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Half of my holdings were in foreign equities but all in US dollar denominated etfs or depository receipts. The only foreign currency that I pay attention to is the Canadian loonies because we cross the border to buy stuff.
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12-13-2015, 06:28 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2010
Posts: 5,915
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We keep about 15 percent in foreign equities. Plus some of our equity holdings are US firms but close to half of their revenue and profit is derived from international operations.
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12-13-2015, 08:09 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Location: Miraflores,Peru
Posts: 1,992
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Income in USD, expenses in PEN, COL is down about 30% this year.
Stronger Dollar brings more tourists, tourists bring me more Dollars,Family can buy more $h*t, circle of life!
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12-13-2015, 08:24 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2010
Posts: 5,915
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We have, and are, avoiding travel and purchases in the US because of the strong USD and weak CAD.
No Florida, AZ, Hawaii etc. for us. We are purposely travelling to countries where our money goes the furthest. We did a great deal of US travel a few years ago when the exchange rate was favourable.
Our low CAD is great for tourism though. We are seeing an influx of US tourists to Whistler and Banff. Great to see them, hope that they all spend, spend, spend and enjoy our scenery and hospitality. Good to see them taking advantage of our low dollar.
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12-13-2015, 10:04 AM
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#18
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,130
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Quote:
Originally Posted by brett
We have, and are, avoiding travel and purchases in the US because of the strong USD and weak CAD.
No Florida, AZ, Hawaii etc. for us. We are purposely travelling to countries where our money goes the furthest. We did a great deal of US travel a few years ago when the exchange rate was favourable.
Our low CAD is great for tourism though. We are seeing an influx of US tourists to Whistler and Banff. Great to see them, hope that they all spend, spend, spend and enjoy our scenery and hospitality. Good to see them taking advantage of our low dollar.
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We certainly enjoyed the favorable exchange rates this year, with 12 weeks in Canada, including 2 weeks in Whistler and the month of August in Canmore (just outside of Banff).
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Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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12-13-2015, 10:27 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,099
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I have a big chunk of change in CDN.
Sad to see it depreciate 25%
Glad I have the rest in USD
Putting your $$$$ into some other currency is not safer than keeping it in USD
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12-13-2015, 11:02 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2010
Posts: 5,915
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We expect that our CAD will be down for at least a year, probably two or more.
So we are spending this winter in SE Asia. Next year, the plan we plan to spend the winter in South America. We were thinking of adding a SA cruise to that trip but will not do so unless we get a screaming last minute deal while we are there. Not even considering Florida or Arizona at this juncture.
What surprised us was how few Americans we met in Greece this past Sept/Oct. The Euro is reasonably good for us but it is fabulous against the USD. Yet most of the tourists we met were from France, Germany, or the UK. That coupled with depressed pricing in Greece made it the ideal vacation destination for those with USD.
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