Why invest in US Dollars?
Investing in local currency is hard when it constantly depreciates in value.
I do not like to consider any money I make or any investment return in U.S. dollars. However, when almost everything is basically indexed to it in my country, unfortunately you’re kind of forced to do your calculations in U.S. dollars.
And what I realized today, bummed me out.
How is My Portfolio Doing in terms of USD?
I like sharing the current status of my portfolio from time to time.
Here you can find more on my website — hukukyatirim.com. Even though they are mostly in Turkish, I’m planning to share my journey here in English as well.
I can say that I have started taking investing seriously and started around 19 months ago. My portfolio mainly consists of Turkish stock market, US stock market, USD, Euro, Gold and Cryptocurrency. And I keep track of my investments fairly well.
To keep an eye of my investments and my returns in USD, I also decided before the new years eve to write down the value of my portfolio and my current returns in USD at every new years begining.
So when I checked my portfolio’s value in USD today and compared it to its past value on New Year’s eve, I was pretty upset.
It has been more than 7 months after the New Year and me and my wife have been working, saving and investing since then. Of course, not every investment is in US Dollars and mostly into the stock market.
When I checked out the current status of our portfolio in USD terms today, I realized that it is almost the same compared to the New Year’s Eve! I was actually shocked and got demotivated a lot. Because, for 7 months, we have actually saved and invested a lot in our local currency. However, because of the depreciation of our local currency against the US dollars, they’re all worth less now.
Of course, one year has not been completed yet. And one reason of such result of the comparision between now and last year is the very bad performance of almost every asset. Specifically, Bitcoin and cryptocurrencies!
I checked the numbers!
Bitcoin was around 42.000 USD Dollars on the last day of 2021. Now it is around 21.000 USD Dollars! I do not even mention the altcoins! Many more assets have been performing pretty bad since the New Year’s Eve.
However, USD/TL was also around 13,35 TL. Now it is 17,40 TL. So anything I buy in Turkish Liras, now worth less in USD, unless they had a higher value appreciation.
There is actually a name for this. This is called currency risk! It is especially applicable for foreign investors in a country. But since the increase in USD/TL exchange rate is also a reason for the markups, currency risk also affects the locals.
Because of such risks in developing countries, I believe it may be a good idea to have some investments in reserve currencies such as USD or keeping an emergency funds in such currencies.
Nevertheless, even though I felt like I am spitting into the wind today when I checked the numbers, I will continue to save and invest with the same determination and I believe that the long-term reward will worth it in the end.
Please keep in mind that this article/story is only for informational and entertainment purposes and should not be considered as a financial or legal advice. Do your own research and consult to professionalls when you are making any financial decisions.
