You’re not alone in worrying about the US economy’s ability to protect your hard earned assets. It’s not a bad idea to look for alternatives in order to diversify away from the US dollar and the tumultuous economy, like many wealthy investors have.
Sadly, many people are getting not only outdated advice, but bad ones too. What tends to happen is that a lot of financial advisors and even do it yourself investors will default to the tried and true international stock funds when they lack the confidence in the US currency. Sure, these might help gain more growth, but do they really help you achieve true diversification?
Why you ask? Well, for one, foreign stocks are usually correlated to US events, whether or not we like it.
Secondly, your investment is still in US dollars because you are buying foreign stocks through an American based fund.
So what to do? The answer is simple: invest in foreign currencies that do not rely on the dollar.
If it makes sense, you can even consider buying hard assets (yes, like that bar of gold, but more on that later). In fact, it might make even more sense to do a combination of the two.
Quick Resource – Check out this company that allows you to store your gold overseas
Even though these approaches will help you not rely on the US economy, it does come with risks. Investing in hard assets are usually available to people with at least 1 million dollars or more, or ones with with at least $200,000 of annual income.
You will also need to find a firm with connections who can help you with these types of deals. In any case, please get a very experienced professional to help you.
Below are a few ways to diversify your income overseas:
Rare Earth Metals
A lot of technology we use today use extremely rare earth metals in consumer, industrial and defense applications. Some of these are used for aerospace parts (scandium) and camera lenses (lanthanum).
Investors who accept the risks of buying into rare earth metals understand that there is rapid growth in this market, and suppliers are struggling to keep up with with the ever increasing demand.
However, with massive growth also comes with massive downfalls. Right now, about 90% of the rare earth metal supply comes from China. They’re looking to restrict the amount of exports, which might mean there will be more demand, or that this method of investment will be really hard to come by.
Many people speculate a smart way to invest in rare earth metals is to invest towards mining operations, mines and related types of businesses that support rare earth metals. (See Also – Why you might want to consider gold and silver)
Unlike the potentially volatile conditions of rare earth metals, investing in agricultural land will most likely keep its value no matter what the market cycles are.
If you want to look into this option, look at the most valuable farmland which produces staples (think corn, soy, and sugarcane). The wealthy have been buying agricultural land in key overseas countries for years.
Swiss Commercial Property
Even though Switzerland has tight restrictions on real estate development, its low cap and lending rates (some as low as 0%) might just be the push for many investors to take the plunge.
Real estate doesn’t really appreciate a lot here, but that also means it doesn’t lose its value either because of its small market. People who want something a bit more stable while being able to get consistent yields would want to really think about getting commercial property in major cities.
Oil and natural gas companies are no longer just available to the largest institutional investors and university endowments. Now, even accredited retail investors can gain access to energy royalty investments.
Don’t know what that means? Simply put, owning a royalty interest means that you own the mineral rights from the land where oil and natural gas are being taken out, and nothing else.
Usually, royalty trusts own a passive stake in these assets and get a steady stream of income. These corporations have a few employees are are usually overseen at an appointed bank by a trust officer.
Not to worry, there is no drilling risk. You’re getting royalties from the wells that are already producing. Again, if you’re looking to diversify your assets with something relatively low risk but gaining some steady yields, this might be another option to look into.
Diversifying your income in overseas assets is not only a logical choice, but a smart one as well. Don’t forget to consult a professional to weigh the pros and cons of each option before you decide to make any major investments.
If you are looking to invest for your retirement, you should consider setting up a self-directed IRA, which would allow you to invest in my recommendations above. Learn more about them