With the US falling dollar, would it be wise to invest in international equity as an American?

Answer 1

Yes, diversify by including international or global stocks or funds in your investments. But don't dump all your US investments -- chances are very high that the falling dollar WILL reverse sometime. It's probably not just around the corner, but do you want all your investment money to depend on your ability to time the foreign exchange rates?

Nearly all of us would be better off just to diversify by keeping 15-30% of our investment money in international funds, and keep it there regardless of the ups and downs of the exchange rates. Like other forms of diversification, it will balance out in time, particularly if you rebalance your asset allocations periodically.

Answer 2

The dollar has been falling for some time now. A few years ago, a dollar was worth more than Euro. Today, a dollar buys only .68 Euros. That's quite a fall.

If you believe that the dollar will continue to fall, then there is money to be made by investing in international equities. The falling dollar boosts your returns as long as your investment is not hedged for currency fluctuations. You can also gain by owning domestic companies with significant sales overseas. (That doesn't necessarily mean "sending jobs overseas" as someone else suggested. Companies that produce goods in the U.S. for export benefit from the falling dollar without exporting jobs.)

However, at some point, the decline will stop. At that time, you lose the artificial boost to your investments from the falling dollar. If it starts to strengthen, it will hurt your investments.

When will that time come? No one knows for sure. However, a lot of financial people think that the Fed will continue to cut interest rates for awhile. If foreign interest rates are generally higher than ours, then the dollar may weaken further.

Answer 3

International Equity bulls have been running for about 2-3 years. You're buying in the "middle". Also, look at the type of international equity u're purchasing. Some of these are "Global" in meaning they are US corporations ditching the USA for cheaper working environments (labor & enviremental). Other products can offer more risk & potential returns such as corporations that are from Russia expanding to other global spots (W. Europe & Central America).

Answer 4

America is the land of the free and the brave ... to invest anywhere. Even non-americans do that. Money knows no patriotism.