Anonymous
How do you minimise forex losses and manage your currency risks when investing in US markets, since USD is expected to depreciate over long term?
I want to get exposed to the US markets via stocks and ETF.
Since I plan to DCA over the next 10 to 20 years, exchanging SGD to USD will mean that I constantly exposed to USD devaluation.
Example if USDSGD drops 10%, I have to make 10% return on my investments to break even.
What should I do ?
To date, I already lost > SGD 6,000 from mid June 2020 till now (SGDUSD 0.70 to 0.75)
Please HELP !!!
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Hi there
Since u want exposure to US market, I presume u are after capital gains? As such, this is the tradeoff u must make, being exposed to FX risk
That said, u could consider this a premium in order to invest in some of the best US companies. As long as yr capital gains greatly exceed the FX loss, it’s worth
Additionally, since u have a 10 - 20 year investment horizon, all the more FX risk becomes but a minor loss and a distraction to long term wealth creation.
So basically, don’t worry about this small cost, buy the companies u believe and let yr investments play out
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Can consider using gold or bitcoin (higher risk) as a hedge or consider other countries market. But ...
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Dont worry about currency hedging if you are not a hedge fund manager. Have a diversified portfolio and expose yourself to both developed and emerging market financial assets.