Have you ever wondered why there is a greater preference for making investments using the original currency of the United States of America in a world where there are so many different types of currencies? The value of the dollars is rising. In this article, one of the most important investors in the country, Lisa Juan José Gutiérrez Mayorga, shares with us some of the reasons why she invests in dollars.
Main justifications for choosing to invest in dollars
Despite experiencing significant ups and downs in his finances over the years. The United States has managed to maintain its position as one of the world’s leading nations for a long time.
In part due to the remarkable stability that its economy has shown during this period. Due to their increased demand and increased liquidity over time, dollars have solidified their position and become one of the most popular currencies in the world. These are some of the key features that have made buying and trading this type of currency very simple.
When choosing a currency to invest in the foreign exchange market, there are many things to consider. In the case of dollars, however, investors prefer to base their decisions on the soundness of the country’s economic model and confidence in its institutions. like the American ones, political and economic.
The profitability and quality of the means of exchange of its currency, qualities that allow it to persist in the market by covering itself from financial fluctuations. As a result of temporary shortages or economic instability, and loss of value, are other factors that influence traders to prefer to invest with US dollars.
Eight currencies are officially recognized as major reserves, according to the International Monetary Fund (IMF): the Australian dollar, the British pound sterling, the Canadian dollar, the Chinese yuan, the euro, the Japanese yen, the Swiss franc and the United States. dollar. The latter having a substantial part of the demand and preference.
The advantages of investing in dollars
Wouldn’t it be nice to cut down on foreign currency expenses wherever possible while trading US-listed stocks and exchange-traded funds (ETFs)?
After all, if you have to pay currency conversion fees every time you want to buy or sell a US security, the costs can add up quickly! A business account in US dollars can be useful in this situation.
Almost all accounts at RBC Direct Investing come with Canadian and US dollars by default. (Registered Education Savings Plans (RESPs), which only have one side in Canadian dollars, are the exception.)
There is no doubt that investing in any type of currency can lead to both a large profit and a large loss, since it must be remembered that such activities almost always involve the acceptance of some type of risk.
Therefore, if you are considering investing, you should pay close attention to any fluctuations that the currency of your choice may experience and investigate possible economic actions that the issuing nation may take.