5 Ways to Inflation-Proof Your Portfolio

From TIPS to real estate, these assets offer some protection

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5 Ways to Inflation-Proof Your Portfolio

Foreign Currencies

SwissFranc 5 Ways to Inflation Proof Your PortfolioIf you really have a lack of faith in the U.S. government’s ability to keep the dollar’s purchasing power intact, a simple solution is to look overseas and park your cash in foreign currencies.

Trading forex has become much easier thanks to technological improvements, but be warned that dabbling in foreign currencies can mean a lot of volatility, thanks to an endless flow of geopolitical news and policy actions that threaten to change the game in a hurry.

Oh, and if you want to trade a currency across the world, that might mean doing so at 2 a.m.

However, investors who aren’t concerned with day-trading forex have a host of options available to them in the funds space. Nearly every major currency has an exchange-traded product associated with it. A short list includes the CurrencyShares Swiss Franc Trust (FXF), the WisdomTree Chinese Yuan Fund (CYB) and the Market Vectors Indian Rupee/USD ETN (INR).

Of course, while the U.S. dollar faces specific pressures thanks to central bank policies and economic headwinds, each of these nations has troubles of its own. Remember, despite a general sense that the U.S. is struggling, it has enjoyed a very strong currency in the past few years.

So if you trade forex — even with one of these exchange-traded products, just remember that it’s not as simple as picking a dollar alternative to beat inflation.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.


Article printed from InvestorPlace Media, http://investorplace.com/2013/10/5-ways-to-inflation-proof-your-portfolio/.

©2014 InvestorPlace Media, LLC

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