what is the best way to save in Dollars? Is there an

merlingrey

Jegersmart wrote: »

The point I am getting at is "why"?

Do you have exposure to the USD?


J

He said he wants a hedge against the pound.

But as i say gold is a hedge on any currency based in dollars.

I too however am rather confused about the £50 a month business, what exactly would that hedge against?, only the most severe drop in the pounds value would make any money.

And when i say severe i mean a situation where you'd no longer want to live here LOL

merlingrey

If you insist on £50 a month then the best idea is to invest monthly in a stocks and shares ISA fund that invests only in american companies.

An American fund will have shares in the likes of coca cola microsoft apple etc and so would do well with dollar strength.

Jegersmart

merlingrey wrote: »

If you insist on £50 a month then the best idea is to invest monthly in a stocks and shares ISA fund that invests only in american companies.

An American fund will have shares in the likes of coca cola microsoft apple etc and so would do well with dollar strength.

no. how does this hedge USD exposure?

The point is that the OP wants to hedge against the dollar, the question should be (and is) "why"?

J

merlingrey

Jegersmart wrote: »

no. how does this hedge USD exposure?

The point is that the OP wants to hedge against the dollar, the question should be (and is) "why"?

J

He said hedge against the pound by buying dollars, if you are hedging AGAINST the pound you are wanting exposure away from it in another currency (in this case dollars).

grey_gym_sock

OP hasn't really explained why. he doesn't have to, of course, since his question was how.

but ppl on MSE are so helpful that we like to try to answer the questions you should have asked, as well as the 1s you did

bowlhead99

It costs money to provide bank accounts with small values in them. There is little demand for dollar savings in the UK. If you don't have a big chunk of cash in there to meet minimum balance requirements it is going to cost you some money to maintain the account at somewhere like Citibank in London or LloydsTSB offshore (I have both). Neither will offer FX switches to dollar and back again at interbank rates, there is a cost involved in terms of buy rates vs sell rates.

Interest rates are at all time lows and given monthly account fees you would probably be better just translating cash with a foreign currency merchant periodically and keeping it in a safe in your bedroom.

As Jeger alludes to, if you don't currently have any USD obligations (e.g. borrowings or purchases of goods from US suppliers or future holidays etc) there is no obvious reason to buy and hold small amounts of dollar cash. If you think dollar will strengthen by 10% then yes you could buy dollars and change back to sterling later, and if your total costs of exchange and holding the dollars was only 9% you could make a percent. Of course if it weakens by 10% and your exchange costs are 9% you have lost a fifth of your money.

If you really want long term general exposure to non-sterling assets, which is not a bad thing on the basis that some of your purchases over the rest of your life will not have UK as the country of origin, you could invest in some non-UK equities funds as suggested by Merlin - although does not necessarily have to be US focussed if you are just generally trying to hold something other than sterling. Euro for example has gone up 9% vs GBP in recent times.

Investing is affordable for 50 a month but would need to be a long term plan. As a side note, dollar strength does not necessarily help Microsoft and Apple like you would think because it makes their products more expensive for their international customer base- but this is not the place for such a debate

C_Mababejive

I'd say the OP would be better to invest in a well rated fund which invests predominantly in US companies. Just buying small volumes of dollars is likely to be a sure fire way of either standing still or losing.

Jegersmart

merlingrey wrote: »

He said hedge against the pound by buying dollars, if you are hedging AGAINST the pound you are wanting exposure away from it in another currency (in this case dollars).

OK, so what is his exposure to cable then?

J

merlingrey

Jegersmart wrote: »

OK, so what is his exposure to cable then?

J

Cable?
what do you mean?

Jegersmart

Sorry, the british pound. It used to be called cable.

The point I am trying to make or discuss, and perhaps I am not doing it very well is that if one is going to hedge something then one has exposure in some form or another to something. What I am trying to get to is that if the OP lives in the UK, is paid in sterling and has no exposure (or in this case need) for dollars then I am not sure what he is looking to do.

Sure, if he wants to speculate on a currency going up against the pound then this is something else, it is not a hedge. As someone else mentioned, I don't know what kind of spreads one gets in a bank account but they could be quite wide so this may not be a worthwhile activity in terms of making a profit.

Sorry for confusion.

J