退休储蓄与货币

Hedge Your Retirement Savings With Currencies

Sunday July 22, 9:49 am ET
By Terry Savage, TheStreet.com

Most Americans haven't felt the recent decline in the dollar because the rest of the world, especially Asia, has either cut prices or tied their currency to the value of the dollar. That means the stuff we import from them hasn't risen in price. But if you travel to Europe, you'll get a real shock at how little the dollar buys these days.

What about in the future? We worry about having enough dollars to retire, but what will those hard-earned dollars be worth in the years ahead? It's enough of a concern that you might want to take a small portion of your funds and hedge your bets, even though the Fed says it has inflation under control.

Even at a 3% annual inflation rate, the spending power of your money will be cut in half in just 24 years! Which means that you'll need twice as much money in your last year of retirement as in your first in order to maintain your lifestyle! Now that's a daunting thought.

It's enough to make you consider at least some form of hedge against the possibility that the dollar will be devalued by excess money creation in future years. Gold is the traditional hedge, but these days it has become easier for investors to diversify into other currencies.

Speculators trade foreign currency futures. But there are other investment alternatives for more conservative, long-term investors. Just remember that hedging your bets doesn't mean going overboard. These are ideas for a small portion of your assets, depending on your risk tolerance.

Foreign Currency Bank CDs

You don't have to open an account in a foreign bank to switch your dollars into euros, the British pound or Japanese yen. Everbank.com offers a variety of FDIC-insured certificates of deposit that are denominated in various individual foreign currencies, or "baskets" of currencies.

The interest you earn is equivalent to what you'd earn in a foreign bank. When the CD matures, and you convert back into dollars, you'll either get more dollars if the foreign currency is stronger, or fewer dollars if the currency has weakened.

The minimum investment is $10,000. You can get more information here .

WorldCurrency CD Yields
$10,000 ($US) Minimum Deposit (some exceptions apply)^1,2
Rates as of 7/27/2007 12:00:00 AM

	3-Month		6-Month		9-Month		12-Month
Currency Name	APY	Rate	APY	Rate	APY	Rate	APY	Rate
Australian dollar	4.97%	4.88%	4.94%	4.88%	4.91%	4.88%	5.13%	5.13%
British pound	4.32%	4.25%	4.30%	4.25%	4.37%	4.35%	4.50%	4.50%
Canadian dollar	2.91%	2.88%	3.02%	3.00%	3.01%	3.00%	3.25%	3.25%
Euro	2.52%	2.50%	2.64%	2.63%	2.71%	2.70%	3.00%	3.00%
Hong Kong dollar	2.52%	2.50%	2.52%	2.50%	na	na	na	na
Icelandic krona	12.14%	11.63%	na	na	na	na	na	na
Indian rupee	3.80%	3.75%	na	na	na	na	na	na
Japanese yen	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Mexican peso	4.84%	4.75%	5.06%	5.00%	na	na	na	na
New Zealand dollar	6.79%	6.63%	6.74%	6.63%	6.68%	6.63%	6.75%	6.75%
Norwegian krone	3.03%	3.00%	3.15%	3.13%	3.52%	3.50%	3.65%	3.65%
South African rand	7.71%	7.50%	7.64%	7.50%	na	na	na	na
Swedish krona	1.89%	1.88%	2.01%	2.00%	2.26%	2.25%	2.50%	2.50%
Swiss franc	1.26%	1.25%	1.38%	1.38%	1.50%	1.50%	1.65%	1.65%

Annual percentage yield (APY)

Foreign Currency ETFs

This is a relatively new form of exchange-traded fund, a listed security whose value is based on the assets inside the fund. In this case, the assets are foreign currencies, such as the British pound, Canadian dollar, euro, Mexican dollar or Swiss franc. Owning these shares, which are traded on the NYSE or Amex, is like owning the currency within a foreign money market account.

For more information go to Morningstar's Web site, click on the ETF tab, and then look for the "ETF Screener tool." You'll find them listed in the "bond fund" group, and then the "world bond" category.

Currency Mutual Funds

There is at least one mutual fund that specializes in investing directly in "hard" currencies -- the Merk Hard Currency Fund (MERKX). This no-load fund was launched in May of 2005 and now has assets of more than $110 million. It is designed to give investors diversification across a range of foreign currencies selected by the manager and changed only gradually. That makes this fund suitable for the longer-term investor who wants the professional management and a diversified exposure.

Currently the fund has about 43% of its assets in the euro, another 16.5% in the Canadian dollar, about 10% in the Swiss franc, and smaller amounts in Swedish, Norwegian, British, Australian and New Zealand currencies, as well as 8% in gold. The minimum investment is $2,500, and you can download the prospectus and application here. The fund can also be purchased through the Fidelity or Schwab fund networks.

Next time you pull a dollar out of your wallet, take a closer look. Yes, you'll need lots of them when you retire. And hopefully those dollars will be worth enough to pay for your retirement. It's a bet you might want to hedge in some small way. And that's The Savage Truth.