I recently looked at Everbank.com because of there foreign currency CD and deposit accounts. I was most interested in the Euro simply because it has strengthened rapidly over the last few years versus the Dollar. There are no fees to invest and the deposit account only has a $2,500 minimum but does not earn any interest. The Euro CD account pays anywhere from 2.5 - 3% but has a minimum investment of $10,000. Both of these accounts are FDIC insured.
Looking at what my current high yield savings account (4.3% APY) and then at the yearly return of the Euro versus the Dollar (currently at 11%) it seems that I could earn much more in a Euro deposit account and hedge against any further drop in the US dollar. Of course this would have to take into account a that the US dollar will continue to drop versus the Euro. This however, may be imminent with another FED target rate cut before or at the next meeting.
For anyone looking to invest in liquid foreign currency accounts, I suggest lookting at Everbank. As of now they are the only US bank that I know of that lets individuals deposit money in foreign currency accounts.
Note: As of this writing I do not currently have money deposited with Everbank but may do so in the near future.
Wednesday, October 3, 2007
Easily Diversifying Through Foreign Currencies: Everbank.com
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2 comments:
It seems to me that a weakened dollar, like other investments that have been beaten down, presents an opportunity for smart investors. I guess this depends, though, on whether you think the dollar will continue to drop or has bottomed out.
My thinking is that if the dollar is extremely weak, yes people may pull their money out and go elsewhere, but they may also bet on an eventual rise and actually buy up dollars. Also, it is good for US exports and tourism when the dollar weakens and this "expected" increase in demand for US exports should drive up its strength.
This is textbook reasoning, of course. I guess only time will tell whether this actually happens or not. I just tend to believe in market forces and their ability to correct the swings.
i wonder whether the individual investor needs to hedge against fluctuations in the strength of the US dollar?
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