Investing In Euros: 10 Tips
With the present down turn of EU stocks, investing in the Euro can take nerves of steel. Investing in Euros: 10 tips will make for a kinder, gentler experience. If you are new to Euro investing, read these tips before you take the plunge, so that you will be mentally prepared for the challenges ahead.
- Before you do anything else, your first tip is to research . . . research . . . research. Know the Euro in every way possible. You should be able to easily recognize abbreviations such as EU, EAFE, and MSCI as basic Euro-101. Don’t stop there, however, also fully understand the Euro’s strengths and weakness before taking that plunge into the investment waters.
- Use your research information to enable you to commit to a long term investment goal. Remember you are in this for the long haul, foreign investment strategies differ from domestic investments found here in the USA. Investing in the Euro is a long-term investment of at least 5 years.
- If and when the Euro loses 20 percent of its value, then and only then should you hold off investing. That means you keep investing even if you have a 16 . . . 18 . . . or 19 percent loss of value.
- Please be sure to use a reliable indices indicator such as MSCI Barra or even Standard & Poor’s 500 Index. You don’t want to base your decisions on unreliable data. MSCI has an excellent worldwide reputation with a subscription list of over 2,400 organizations.
- Accept the fact that the Euro will flip/flop. While there will be times when the Euro loses value at an alarming rate, it is still the mainstay of the European Union. Just as the dollar rallied from its all time lows, so will the Euro, according to world economists.
- If you must do something to stop any panic/anxiety that arises, try isolating the Euro from the rest of your foreign stock portfolio. In other words, dabble in the currency of other foreign markets. You will not feel as if you have put all your eggs in the one Euro basket and you will learn that foreign currency naturally rises and declines with its accompanying gains and losses.
- Learn the names of the currency of other countries so that you can follow tip #6. Dinar, Yen, and Pound, for example. (The Kuwaiti Dinar, the British Pound, and the Japanese Yen.)
- Seek investment opportunities with companies that have broad-based exposure with various assets. Investment firms assure their investors that the playing field evens out when you keep this kind of portfolio. Sure some of your investments will lose money, but on the flip-side some will gain money. You never know which way a foreign investment will go, so be willing to diversify.
- While you are to never sell your stocks in an irrational, fear-based way; that doesn’t mean you can’t take advantage of the fact that other investors aren’t as wise as you. Be ready to buy funds that fit into any of the following categories: funds with exposure to high earnings revision, and funds with exposure to industrials.
- Constantly remind yourself that diversity, patience and broad-based exposure are what you need when developing a portfolio based on the Euro. That and a cast-iron stomach to accompany those nerves of steel.
If you have followed this list compiled from leading economists, analysts, and financial advisors, and if you think you have the discipline needed to make long-term investments in the sometimes topsy-turvy Euro market. Then you are now ready to get out there and find someone to do a little trading with.