You’re probably tired of hearing the same old advice about diversifying your money from financial experts. But there are ways to stray from the usual advice.
Consider trading in foreign currencies. No longer is it just limited to people who have huge amount of sums to invest. It is now available even to the average joe.
Here are some things to consider before taking the plunge.
What Are Some of the Advantages?
One of the best perks of trading currencies is even if the economy in your home country isn’t so great, you still have the potential to earn some money. While some might get worried if the market declines, you can bet against different currencies and trade when it’s the best time for you.
For example, if the US dollar is faring worse than the Chinese Renminbi, you can trade your Renminbi and cash in on the extra US dollars you’ll make.
Another perk is that the currency market is actually open 24 hours a day. Major trading hubs are open and close throughout numerous time zones, so there is no need to wait for opening and closing bells, like stock markets.
For example, even if you have a busy schedule, you can trade in Asian markets, even if you are only available in the evening in the US.
Are There Any Risks?
Sure, it sounds exciting to invest in foreign currencies, but you need to do your due diligence and make sure you research into any investments. Like any other types of investments, there are no guarantees you’ll make your money back.
Even if there are risks to trading foreign currency, they are not as high as other forms of investments. You can lose money, but you are limited in how much you invest in the first place.
So that means if you put in $5000, the maximum amount you would lose is $5000. In a nutshell, don’t put in more money than you are willing to lose.
How Can I Get Started?
There are many options to trade foreign currencies, with forex being one of them. Since it can be hard to do thorough research on foreign markets abroad, forex trading offers individuals a general picture of how they can invest their hard earned money.
For example, you can read up on information on why Asia is booming, and that can help you decide if you want to invest in any type of Asian currency. It might be hard to look up on Chinese companies to come up with your own conclusions unless you’re fluent in Chinese or have information translated.
Another reason it’s a bit easier to use forex is that most people focus on 6 major types of currencies.
- Euros and US Dollar
- British Pounds and US Dollar
- US Dollar and Japanese Yen
- US Dollar and Canadian Dollar
- Australian Dollar and US Dollar
- New Zealand Dollar and US Dollar
So instead of picking between, say, 10,000 stock options to find out the best ones for you, all you need to do is really keep up with those eight countries and their economic and political updates, and you’re all set to go.
Another option to consider is taking advantage of social media to help with your currency trading efforts. Enfinium’s online platform FX Copy helps make it easier, and arguably more fun to trade, by using mobile and gamification features.
They incorporate social media, such as seeing whether or not a friend bought or “liked” a certain currency. The idea here is to make it easier for you to make educated decisions on what you should purchase.
FX Copy offers real-time currency exchange rates, so you can make as many trades you want throughout the day. They provide an interactive dashboard where you can browse through your feed, read up on exchange rates, and even make trades, all from the comfort of your home, or wherever you are.
Want more of a reason to use this platform? Since they make money on its users trading all at once (also called making money on the spread), there are no brokerage or transactions fees for you.
No longer were there barriers there once were with investing in foreign currencies. Now anyone can invest smaller amounts with little risk and earn a reasonable amount back. There is also no excuse of not having the time or knowledge, since markets are open 24 hours a day and there are many options to learn about what types of currency to look into. Again, with any investments, make sure you do your research and consult a professional if you have to.
Will you consider investing in foreign currencies?