Investing in USD from the Eurozone (Jan 2015)
"No, this is not solid advice. It's a prediction with very little factual basis, since US interest rates are kept just as low and debt levels are just as high as in the Eurozone. The USD may rise or fall against the EUR, stay the same or move back and forth. Nobody can say with any certainty. However, it is not nearly as risky as ""normal forex speculation"", since that is usually very short term and highly leveraged. You're unlikely to lose more than 20-30% of your capital by just buying and holding USD. Of course, the potential gains are also limited."
**Economic and Monetary Union of the European Union: Monetary policy inflexibility**  Since membership of the eurozone establishes a single monetary policy for the respective states, they can no longer use an isolated monetary policy, e. g. to increase their competitiveness at the cost of other eurozone members by printing money and devalue, or to print money to finance excessive government deficits or pay interest on unsustainable high government debt levels. As a consequence, if member states do not manage their economy in a way that they can show a fiscal discipline (as they were obliged by the Maastricht treaty), they will sooner or later risk a sovereign debt crisis in their country without the possibility to print money as an easy way out.  ***  ^[ [^PM](https://www.reddit.com/message/compose?to=kittens_from_space) ^| [^Exclude ^me](https://reddit.com/message/compose?to=WikiTextBot&amp;message=Excludeme&amp;subject=Excludeme) ^| [^Exclude ^from ^subreddit](https://np.reddit.com/r/economy/about/banned) ^| [^FAQ ^/ ^Information](https://np.reddit.com/r/WikiTextBot/wiki/index)   ^] ^Downvote ^to ^remove ^| ^v0.23 "EPS is often earnings/diluted shares. That is counting shares as if all convertible securities (employee stock options for example) were converted. Looking at page 3 of Q4 2015 Reissued Earnings Press Release we find both basic ($1.13) and diluted EPS ($1.11). Dividends are not paid on diluted shares, but only actual shares. If we pull put this chart @ Yahoo finance, and hovering our mouse over the blue diamond with a ""D"", we find that Pfizer paid dividends of $0.28, $0.28, $0.28, $0.30 in 2015. Or $1.14 per share. Very close to the $1.13, non-diluted EPS. A wrinkle is that one can think of the dividend payment as being from last quarter, so the first one in 2015 is from 2014. Leaving us with $0.28, $0.28, $0.30, and unknown. Returning to page three of Q4 2015 Reissued Earnings Press Release, Pfizer last $0.03 per share. So they paid more in dividends that quarter than they made. And from the other view, the $0.30 cents they paid came from the prior quarter, then if they pay Q1 2016 from Q4 2015, then they are paying more in that view also." "But in the debt-payoff-first scenario, I'd be wiping out my debt in   two years. It would take several more years if I were to just pay the   minimums and put the extra money toward investing instead. Right. The idea is that in 2 years, you are likely to have more in the savings/stock account than you owe on the loan. But. The range of returns for X years has a smaller standard deviation the greater X is. e.g. any year has about a 1 in 3 chance of being negative. A 10 year period had a negative return (-1% CAGR) in the '00s recently, but the 15 year return even around that decade would have been successful. Jan 1 '96 - Dec 31 2010 returned 6.76% CAGR, Jan 1 2001 - Dec 31 2015 returned 4.96% CAGR.  This tells you that the time frame is as important as your sleep factor. Your 2 years? I'd just kill the loans. A 10-15 year horizon? I'd ask how you ""feel"" about that debt. The cost of going after a potential higher return may not be worth the risk to many. For some, it's fine. I retired, with a mortgage still in place, but the money in my 401(k) that could have paid off the mortgage is now about twice the remaining balance. So I sleep like a baby.  In the end, I'm a fan of investing for the long term vs paying off low rate debt, but it's a choice based on the individual." "Unless you are buying a significant value of your goods in USD then the relative strength of USD versus your local currency will have little to no effect on what the value of your investments is worth to you. In fact only (de|in)flation will effect your purchasing power. If your investments are in your local currency and your future expenses (usage of the returns on the investments) will be in your local currency FX has no effect. To answer your question, however, since all investments involve flows of money there can be no investment (other than perhaps gold which is really a form of currency) that isn't bound to at least one currency. In general investments are expected to be valued against the investor's home currency (I tend to call it ""fund currency"" as I work with hedge funds) as the return on the investment will be paid out in the fund currency and returns will be compared on the same basis. If investments are to be made internationally then it is necessary to reduce, or ""hedge"" the exchange rate risk. This is normally done using FX swaps or futures that allow an exchange rate in the future to be locked in today. Far from being unbound from FX moves these derivatives are closely bound to any moves but crucially are bound in the opposite direction to the hoped for FX move. an example of this would be if I'm investing 100GBP (my local currency) in a US company XYZ corp which I expect to do well. Suppose I get 200USD for my 100GBP and so buy 1 * 200USD shares in XYZ. No matter what happens to XYZ stock any move in GBP/USD will affect my P&L so I buy a future that allows me to exchange 200USD for 100GBP in 6 month's time. If GBP rises I can sell the future and make money on both the higher exchange rate and the increase in XYZ corp. If GBP falls I can keep the future until maturity and exchange the 200USD from XYZ corp for 100GBP so I only take the foreign exchange hit on any profits. If I expect my profits to be 10USD I can even buy futures such that I can lock in the exchange rate for 110USD in 6 months so that I will lose even less of my profit from the exchange rate move." Don't worry. The Cyprus situation could only occur because those banks were paying interest rates well above EU market rates, and the government did not tax them at all. Even the one-time 6.75% tax discussed is comparable to e.g. Germany and the Netherlands, if you average over the last 5 years. The simple solution is to just spread your money over multiple banks, with assets at each bank staying below EUR 100.000. There are more than 100 banks large enough that they'll come under ECB supervision this year; you'd be able to squirrel away over 10 million there. (Each branch of the Dutch Rabobank is insured individually, so you could even save 14 million there alone, and they're collectively AAA-rated.) Additionally, those savings will then be backed by more than 10 governments, many of which are still AAA-rated.  Once you have to worry about those limits, you should really talk to an independent advisor. Investing in AAA government bonds is also pretty safe. The examples given by littleadv all involve known risky bonds. E.g. Argentina was on a credit watch, and paying 16% interest rates. For question #1, at least some US-based online brokers do permit direct purchases of stocks on foreign exchanges. Depending on your circumstances, this might be more cost effective than purchasing US-listed ADRs. One such broker is Interactive Brokers, which allows US citizens to directly purchase shares on many different foreign exchanges using their online platform (including in France). For France, I believe their costs are currently 0.1% of the total trade value with a 4€ minimum. I should warn you that the IB platform is not particularly user-friendly, since they market themselves to traders and the learning curve is steep (although accounts are available to individual investors). IB also won't automatically convert currencies for you, so you also need to use their foreign exchange trading interface to acquire the foreign currency used to purchase a foreign stock, which has plusses and minuses. On the plus side, their F/X spread is very competitive, but the interface is, shall we say, not very intuitive. I can't answer question #2 with specific regards to US/France. At least in the case of IB, though, I believe any dividends from a EUR-denominated stock would continue to accumulate in your account in Euros until you decide to convert them to dollars (or you could reinvest in EUR if you so choose). "It's likely that the main reason is the additional currency risk for non-USD investments. A wider diversification in general lowers risk, but that has to be balanced by the risk incurred when investing abroad.  This implies that the key factor isn't so much the country of residence,  but the currency of the listing. Euro funds can invest across the whole Euro zone. Things become more complex when you consider countries whose currency is less trusted and whose economy is less diversified. In those cases, the ""currency risk""  may be more due to the national currency, which justifies a more global investment strategy." The idea behind this move is to avoid or mitigate long-term deflationary pressure and to boost the competitiveness of Swiss exporters. This is primarily a Swiss-based initiative that does not appear likely to have a major impact on the broader Eurozone. However, some pressure will be felt by other currencies as investors look to purchase - ie. this is not a great scenario for other countries wanting to keep their currencies weak. In terms of personal wealth - if you hold Swiss f then you are impacted. However, 1.2 is still very strong (most analysts cite 1.3 as more realistic) so there seems little need for a reaction of any kind at the personal level at this time, although diversity - as ever - is good. It should also be noted that changing the peg is a possibility, and that the 1.3 does seem to be the more realistic level. If you hold large amounts of Swiss f then this might cause you to look at your forex holdings. For the man in the street, probably not an issue.