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How to Invest in Foreign Money

Posted by at 3:41 AM Read our previous post

1. Become familiar with the concept of the foreign exchange rate before you actually start investing. The foreign exchange rate, which is often shorthanded as FOREX, is simply the amount of foreign money that one unit of another currency is worth. For instance, if $1 American is worth $1.5 Canadian, the FOREX rate for American dollars to Canadian dollars is 1.5. The FOREX rate for trading Canadian dollars for American dollars, on the other hand, would be roughly 0.67. Track foreign currencies online or on television for several months to get an idea of their fluctuations before actually investing your money.
2. Consider opening an account with a FOREX brokerage. To do so you'll have to find a FOREX brokerage online or locally and contact them regarding setting up an account (for a list of FOREX brokers see Resources below). Although you will have to pay fees to your broker, and this is a relatively high-investment method of investing your money in foreign currencies, FOREX brokerages are the primary means of doing such investing. Some of the more traditional brokerage also offer FOREX trading. So, if you already have a broker for stock trading, check with them and seen if they offer FOREX services as well.
3. Invest money in a foreign currency exchange-traded fund (ETF). ETFs are a relatively economical way of investing money in foreign currencies without all of the relative hassle and complexity of trading through a FOREX brokerage. Foreign currency ETFs are a great way of investing in global currencies with limited money to invest and low cost. To invest in a ETF, contact your stock broker or financial planner and inform them that you want to invest in some ETFs, which are traded on the stock market like ordinary stocks.
4. Invest your money in a foreign currency mutual fund. Although such mutual funds do have certain downsides, such as minimum lengths of investment and fees, they allow you to easily diversify your holdings across many global currencies. Investing your money this way is relatively easy and such mutual funds take all of the detail-work out of the equation for you. Once again, to invest money if a foreign currency mutual fund you can simply contact your stock broker or financial planner, or you can contact a mutual fund company directly and invest through them in that way.

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