Currency

Currency investing can be very complicated and I seldom participate. However, in todays global economy, it is advisable to have a good understanding of how fluctuations could effect your investment.

I will use a personal example to help illustrate. Almost six years ago, I decided to invest in a Government secured Bank offer in the Philippines. Those of you familiar with the Philippine Government are probably chuckling right now.

Historically, the Philippine Government has been very unstable. However, a very good friend of mine lived in Daraga and told me about a local bank offering a "Double Your Money" Time Deposit. It offered investors the opportunity to receive twice their investment if they kept their money in the bank for six years. It was gauranteed by the Philippine Government, up to 100,000 Pesos.

With great hesitation, I decided to invest.

The exchange rate between the US Dollar and the Philippine Peso was, $1 = 48 pesos. It cost me about $2100 to purchase 100,000 Pesos. That was almost six years ago.

Currently, the US Dollar has fallen in value against the Peso and the exchange rate sits at $1 = 41 Pesos.

What does that mean?

This investment matures in 3 months. I will receive 200,000 Pesos. If the exchange rate would have stayed the same as when I purchased the Time Deposit, I would be receiving about $4200. However, since the US Dollar fell in value against the Philippine Peso, I will now receive more.

200,000 Pesos at an exchange rate of 41 Pesos per US Dollar will now purchase $4878.

200,000 Pesos / 41 Pesos (The Cost of one US Dollar) = $4878

My original investment of $2100 is now worth $4878. In six years time, I have received an overall return of about 137% due to the gain in the exchange rate.

That change in the value of the dollar would have worked against any individual who purchase US Dollars with Pesos.

Unfortunately, I cannot elaborate on the art of trading currencies on a technical level. I can tell you that it is now possible to trade them through ETF's (Exchange Traded Funds).

Currency Trading can be further understood via free online trading accounts.

I have isolated two currency ETF's that could easily return double-digit gains.

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