The Power of the Greenback: 5 Compelling Reasons to Invest in the US Dollar and Dollar Assets

The Power of the Greenback: 5 Compelling Reasons to Invest in the US Dollar and Dollar Denominated Assets for Financial Growth

Invest in the US dollar for maximising your returns

How are you making your money grow? Have you checked the investment options available to you? Does your investment portfolio include foreign currencies?

Did you know that foreign currencies are a great way to grow your money? The US dollar (USD) in particular is a fantastic currency for assured returns at low risk.

Yes, that’s right! To a lot of people in the developing world, this may seem a little out of the box. But as a salaried person you should surely look to add USD based assets to your investment portfolio.

Why?

Check out below.

1. Dollar investments are safer

The stability of a nation’s currency depends on the health of its economic and financial systems. Unlike in the developing world, or even China and Russia, financial institutions and markets in the US are very well developed.

The financial data collection and reporting systems are highly efficient. The quality of data is great too. The level of transparency in the system, protection of property rights and access to information are outstanding.

No wonder the trust in the dollar among the global community is so strong and unwavering!

These are some of the factors that make the dollar a safe investment vehicle for the developing world. Even if the dollar value crashes, you can be sure that it’ll bounce back solely because the US financial system is built on strong proven rational principles.

2. Returns are guaranteed

While investing, there’s always the risk of your money not growing. Or worse: losing your money. But with the USD you can be pretty much certain that you’ll be making profits.

This is because historically the dollar has been strengthening against currencies of the developing world. Check the USDX graph below. It shows how the USD has risen against other top currencies in the world since the financial crisis of 2008.

This isn’t only due to the economic growth of the US. Developing countries have a vested interest in keeping their currencies weaker than the dollar.

When your nation’s currency is weaker than the USD, local firms can export goods and services at prices that are cheaper to the Americans. In turn, they can make higher profits than in their local markets.

Also, when immigrants send money back home, a few dollars they send gets converted to large amounts in their own currency. As developing countries are dependent on such fund transfer (remittances), their governments and central banks try to maintain the weakness of their currency.

Now you can see that all these things can work to your benefit. When you invest in the USD assets, you’re pretty much assured they’ll grow because of the strengthening dollar.

3. Dollar is the global currency

The USD is the currency of global business. When 2 companies from different parts of the world make deals, they do so in dollars. It’s the standard for comparison across the world.

Internationally, the trust in the dollar is so high that central banks of other countries hold their reserves in USD!

With the digital and e-commerce boom, cross-national transactions on the internet happen in dollars.

You may be aware of how some countries like Zimbabwe went through trying times and had to abandon their own currency. Such a situation would be next to impossible with the USD.

The collapse of the USD would pretty much mean the collapse of the economy of the modern world. This is why, the whole world has a responsibility to keep the USD going.

Thus, for an investor like yourself, the USD turns out to be an asset that is literally backed by the whole world!

4. Dollar assets protect you from local inflation

How often do you hear the term inflation on the news? Pretty much every day, right? That’s because it’s a vitally important metric on which the nation’s economy depends.

Inflation, in simple terms, is the percentage by which the price of goods and services increases. So, more inflation means, prices have increased by a larger percentage.

The problem with inflation is that it’s next to impossible to isolate its causes. Therefore, it can merely be controlled to a certain extent, but only at the expense of other important economic parameters. Plus, it’s tricky because wildly curbing inflation would result in large scale unemployment and economic downturns.

This is the reason why developing countries have a hard time. Developing countries need to fight poverty, create employment, improve literacy levels and living standards, and also save for the future.

And, if you need economic growth you must allow a little inflation. But allowing inflation is going to hurt the poor the most. Hence you see higher inflation levels and often times hyper-inflation in developing countries.

So, if you’ve saved in your local currency, you’re in danger of losing money. Due to inflation your money can no longer buy things whose prices have now gone up!

The solution: invest in the USD. The very highly developed financial system of the US pursues a policy called inflation targeting. It means the central bank of US — the Federal Reserve, tried to ensure that inflation doesn’t rise above 2%. Due to recent Covid pandemic and the quantitative easing that followed inflation has steadily risen across the world and the US was no exception. But the Federal Reserve has taken steps to reduce it using a very hawkish stance which will persist till the inflation drops to the 2% despite the risk of a recession!

This makes it immensely convenient for you to hold a part of your investment in dollars. When you go in for dollars you get stability.

5. Dollar assets give you international diversification

One of the main reasons why people hesitate before investing is the risk of losing their money. Yes. If you want high returns you need to go in for higher risk.

Yet, that needn’t be the reason why you settle for low return assets. There are several ways to manage risk.

And, one sure shot way is diversification.

Diversification means, instead of putting in your money in a single large asset, you buy a bunch of them. In that way, even if some of your assets don’t perform, others will. So, you walk away with higher returns at mitigated risk levels.

Investing in the dollar offers you this diversification in your investment portfolio. When you purchase dollar-based assets, you’re diversifying into the financial market of the US. This is going to reduce your risk and bring you better returns.

That’s why we at Crowd Candy have come up with a way for you to invest in US based startups in USD. At Crowd Candy you can invest in US based startups in the form of NFTs. You have all the advantages of investing in the dollar. You get the added benefit of purchasing a high return high risk alternative asset as a liquid NFT that you can sell on any NFT exchange.

Go and check out our platform. Start investing!