Why Invest in the US Dollar?
~ Wednesday, January 17, 2024 Blog Post ~
There are plenty of reasons why investors should pour their funds into the US dollar. The world’s reserve currency offers the following advantages:
1) Time value of money: A US dollar on hand today is worth over a dollar guaranteed in the future due to inflation.
2) The US economy has held up better than those of other countries.
3) The US dollar is a safe haven during times of economic uncertainty, market volatility, and instability.
Investors worried about the ongoing Russia-Ukraine war, an international economic downturn, and recent US bank failures — Silvergate Capital, Signature Bank, and SVB Financial — can seek security and shelter in the US dollar.
4) Inflation-adjusted US interest rates are increasing as caused by one of the fastest Federal Reserve rate-hike cycles in contemporary history.
In top high-yield savings accounts, investors waiting for a better time to purchase stocks and sitting on the sidelines can earn a 4-percent interest rate or higher on the US dollar.
These deposit accounts are essentially risk free for balances up to US$250,000 per banking institution, as long as the latter is insured by the Federal Deposit Insurance Corporation.
These four advantages can deliver high yield for investors who choose to invest in the US dollar for the long term.
References:
https://www.forbes.com/advisor/investing/strong-dollar/
https://www.morganstanley.com/ideas/the-strength-of-the-us-dollar-investing-risks-2022
