Protection of funds against change variations

[express]

Hi,

I have a certain amount in € from real estate sale, that I want to "invest" safest as possible, and to me that means maintly to try to absorb main currencies fluctuations
What kind of mid / long term strategy would preserve the best the value of money?
Was thinking spliting in 4 or 5 amounts in currencies like CHF , EUR , USD , GBP , CNY . No crypto
Are institutional bonds good for that? (which ones? is USA the only one to sell USD bonds?) If I buy 50k$ US bonds are they really bought back 10 years later their prixe + coupon without worry?
Some arbitration advisable from time to times?, like when Currency A took 6% on B, time to convert 30% of B to A?
I consider € to be quite weak compared to main other currencies now should I wait a little?
Any suggestion coming from someone used to change manipulations is welcome

I've read a little interesting things here Protect Your Foreign Investments From Currency Risk

 

[Martin Everson]

What kind of mid / long term strategy would preserve the best the value of money?

This is a preserving purchasing power question ultimately. If there was such a simple answer we would all be well off. As we are not all well off you can take it that a full proof strategy does not exist. Speak to 100 fund managers, gold bugs, crypto nuts, investment advisors and you will get 100 varied answers none of which are full proof.

Are institutional bonds good for that?

Bond market is completely overvalued right now from top to bottom so if you are getting in now you expecting rates to continue to fall and economy to go into a deflationary spiral.

Some arbitration advisable from time to times?, like when Currency A took 6% on B, time to convert 30% of B to A?

Currency speculation to try and preserve value of money? Not my idea of how to protect purchasing power of money. Might as well invest in lottery tickets.

I consider € to be quite weak compared to main other currencies now should I wait a little?

Patience is a virtue....so yes. Messing with foreign currencies results in the below.....

 

[express]

I get some of the points you raise. I don't need these savings next 3y
What currencies should I choose to Split in 4 différent term deposits for instance?

 

[Martin Everson]

I don't need these savings next 3y What currencies should I choose to Split in 4 différent term deposits for instance?

Ok so currency speculation is what you are choosing. Please write down all the currencies you are interested in on pieces of paper. But them in a hat and shake that hat a few times and then pick out 4 of them and away you go.

 

[KJK]

Was thinking spliting in 4 or 5 amounts in currencies like CHF , EUR , USD , GBP , CNY . No crypto

If you don't want any crypto/Bitcoin then my opinion on these:
CHF - is considered a safe haven, also it is a very overvalued currency and hard to predict what SNB can randomly do, on large amounts you will pay -0.75% negative interest
EUR - currency which has a lot of its problems and it is not impossible that it will collapse or divide, on large amounts you will pay -0.5% negative interest
GBP - UK is now exiting the European union and sterling already lost a lot of its value and it can continue to do so in the next 2-3 years
CNY - good to know that China actually has two currencies, CNH and CNY. CNY, which you mention, is not freely interchangeable
and you will not get it if you are not living in China. CNH is possible but completely unpredictable what a one-party communist totalitarian regime can do in a trade war. These two currencies usually correlate very closely in a very narrow range but it may not be true in the future
USD - probably the most solid of these five, it is the world's reserve currency and you can get 2% on a deposit. It is possible that dollar will weaken if Trump gets reelected.

So to sum it up, it is like picking the prettiest turd in the toilet (which is USD in this case).
If you just want to leave money lying on an account for 3 years, it won't matter that much if it is in euros or dollars. You may also invest the money into something. If you want to gamble with foreign currencies, Turkish Lira and Russian Ruble may be interesting.

 

[void]

Are institutional bonds good for that? (which ones? is USA the only one to sell USD bonds?) If I buy 50k$ US bonds are they really bought back 10 years later their prixe + coupon without worry?

Buddy, take all your money you would invest this way and buy BTC - you'll do much much better for sure.

 

[express]

Splitting a sum in 4 major currencies is the opposite of gambling.
If one currency loses value, this is against another that in comparaison, gains value
This is a compensation scheme
BTC has strictly no interest. Too heavy to be a currency, and outdated. Historical value

 

[bastard]

Buddy, take all your money you would invest this way and buy BTC - you'll do much much better for sure.

but how long does he has to wait for doing much better. BTC is going up and down alot. One day you have 1000 in your account and the next day 200 maybe you have to wait 4 - 12 month before it is going up to just 1000 again so you don't even made a single coin in profits.

 

[Martin Everson]

Splitting a sum in 4 major currencies is the opposite of gambling.

This is pure gambling like putting your chips on red "and" black at the roulette table

You might as well create your own SDR basket then with same weighting IMF uses. I repeat currency speculation is just that...speculation.

 

[express]

I am not wishing to speculate. I don't get why people here think having 100000€ + 100000usd + 100000chf is spéculation!?
On the opposite, this is a known way of change risk coverage. If € (or USD) drops by 30% compared to 2 others, your basket only support 1/3 of this loss compared to the one with same initial amount on $
I only want to get more technical about this technic. Maybe existing instruments / funds already existing

 

[void]

but how long does he has to wait for doing much better. BTC is going up and down alot. One day you have 1000 in your account and the next day 200 maybe you have to wait 4 - 12 month before it is going up to just 1000 again so you don't even made a single coin in profits.

I was just responding to the idea of putting his money for 10 years to US institutional bonds which are crazy overpriced and in ten years - I simply don't think it's a good idea
I don't know where BTC will be in 10 years but I'd bet (literally) on 5M+

also the idea of splitting the wealth into 4 different currencies in the banks as a tool for protecting it is a nonsense

 

[Martin Everson]

I am not wishing to speculate. I don't get why people here think having 100000€ + 100000usd + 100000chf is spéculation!?

Do you grasp the basics that if you diverse into different currencies with the expectation of favorable movements that you are currency speculating? Do you understand this is not protecting your funds. On the contrary it is risking your funds as you have ZERO idea where the currency movements will go. You understand you would be guessing, you would be betting, you would be speculating. .

 

[KJK]

I was just responding to the idea of putting his money for 10 years to US institutional bonds which are crazy overpriced and in ten years - I simply don't think it's a good idea
I don't know where BTC will be in 10 years but I'd bet (literally) on 5M+

also the idea of splitting the wealth into 4 different currencies in the banks as a tool for protecting it is a nonsense

I agree it is nonsense, I basically already wrote that above, just added an overview of the mentioned currencies - out of which USD would be best in this case.

Also I think the logic in bonds wouldn't be now to lend your money to the US government for 10 years and get 2% p.a. in return. If you wanted 2% you could just keep USD in Interactive Brokers which also gives you 2% and you don't have to deal with bulls**t such as bonds.

What I believe the logic is this: buy the bonds now through an ETF such as TLT, wait for interest rates in United States to drop to zero maybe next year, bonds will rise in value, sell to a greater fool. Then some crash or hyperinflation will happen and yes they may be pretty stupid idea for 10 years.

OP, if you think diversifying across 4 currencies is a great idea, then get a forex account and start trading there. No many people are geniuses who can predict currency fluctuations long term, if you think you can do it, then go ahead. Many people thought EUR will reach parity with USD and weaken (1 EUR = 0.9 USD) several years ago. That didn't happen and actually Euro may get stronger again if Trump becomes insane and Fed listens to him.

However, as I said, it is difficult to predict and in the end it doesn't even matter that much. It is a choice between a giant douche and a turd sandwich.

If you won't need the money for 3 years and most of your spendings are in USD (or currency pegged to USD), find some instrument in USD. If most of your spendings are in EUR (or currency pegged to EUR), find some instrument in EUR.

Buying a government bond is not "investing" even if you put it in quotes.

 

[Martin Everson]

The basis of asset protection is surety and certainty. Seems some peoples whole strategy is based on "what if'" aka the hypothetical.

Be careful out there folks

 

[Untangle]

Personally I would advise you to reinvest in real estate, there are some good deals out there, just need to find them. Some properties that need reasonable work might be had for 10-30% cheaper and no harm in making low ball offers to start with.

 

[express]

That is completly true.But this time I'm trying to find the way to hold one but not in my name (thought UK LTD? I will go to UK next month to get proper answers). But thought I will keep a good part as currency deposits

 

[Untangle]

That is completly true.But this time I'm trying to find the way to hold one but not in my name (thought UK LTD? I will go to UK next month to get proper answers). But thought I will keep a good part as currency deposits

You can make a Trust I believe for this.
Anyway if you invest in UK housing in order to rent, you have to have a company as it will allow you not to pay extra taxes on the rent income (section 21) as if you were doing this as a person. In Belgium you pay no taxes on rental income as well. Just an idea.

 

[express]

I already did a post about this , I finaly concluded that it has to be 2 seperate companies to own and rent. Cheap Seychelles IBC may be enough for rents. But France doesn't recognises a trust. It may recognise a LTD once inmatriculated localy (with fr company registration number) and may require local tax représentant that you have to chose. Other possibility is to use french realestate company (SCI) to buy and then sell shares. This makes 2 sales so multiplies taxes (actually 8% then 5% when shares sales)

Regarding my post I remain convinced that 50% USD + 50% EUR (whatever on cash / bond / stock / any instrument) absorbs partialy a currency failure.
Lots of analysts say usd will come to parity to EUR midterm but longer term is more pessimistic to USD. I don't want to hold 100% USD. Just arithmetics. No speculation here but hedging

 

[Untangle]

Why do you want French authorities to "recognise" your trust if you want to reinvest your cash abroad.
Don't worry French tax office will recognise your trust abroad if you make profit. You probably know that already.

Same with an IBC from Seychelles and profits withdrawn from a bank account. IBC don't exist in France, but they would gladly tax your income since you are a resident in France (Assuming you are).

If you are not doing the property thing and simply want to keep your current balance to remain or increase, there are many company shares that are very stable and keep growing year after year. I would stay away from currency games. Invest in a few different company activities such a luxury, alcohol, energy, ecommerce etc to mitigate your risks

 

[express]

IBC allows income to ne totally undeclared in France. They have no way to know.
A trust just can't own real estate in France (I'm french). Notarial office will only allow a sale to the types of company I quoted