2024-07-04 17:26:47
Brazilians have more and more things at their disposal Opportunities for asset diversification.
One of them is Dollarization.
However, for investors seeking to understand the subject, overseas investing remains synonymous with much doubt and distrust.
This article will seek to enlighten you on some The Myths and Truths Behind the Dollarization of Assets.
Hopefully, by the end of this article, you’ll have an idea of whether this investing strategy makes sense for your assets.
let’s go?
What is asset dollarization?
Before delving into the myths and truths of dollarization, it is important to remember that What is asset dollarization?.
Asset dollarization is the practice of shifting some of your investments into U.S. dollars.
This means that you can stop investing only in local assets, such as fixed income and Brazilian stocks, and now have more opportunities to invest in international markets, such as US Treasuries (Treasury), global company stocks, ETFs, and more.
Learn more | The impact of asset dollarization on personal planning
What are the myths behind asset dollarization?
Unfortunately, investing, even local investing, brings a lot of uncertainty to Brazilians.
Moreover, with inflation being very high lately and currencies and monetary policies constantly changing, relying on an investment strategy is not an easy task.
What we are doing here is that when it comes to dollarizing assets, you may have heard myths regarding the subject.
“Dollarization is only for millionaires”
First, transferring assets to USD can: Seems to be a strategy limited to investors with strong purchasing power.
And there is some truth to this understanding.
Some international investment options are exclusive to those with significant assets, primarily due to the costs involved and the overall operations.
But reality shows Opportunities for all equity sizes.
You need to find the best alternative, research its costs and understand if it makes sense for your financial goals.
Learn more | A beginner’s guide: How to invest overseas safely and efficiently
“Investment diversification can only be achieved by leveraging local assets”
This is another myth that has some truth to it.
It is undeniable that your assets will Diversification If you invest it in different categories of fixed income and variable income. But only to a certain level.
Even if you invest in different asset classes, Your investments will be interconnected: they all depend on the direction of the Brazilian economy.
In addition, from a more comprehensive perspective, Brazil currently accounts for less than 1% of global traded stocks, while the United States accounts for more than 60%.
Therefore, investors see the dollarization of the U.S. market and equity Ways to diversify your investments and reduce the risk of investing in just one country.
Read regarding | International Diversification: Why and How to Expand Your Investment Portfolio Across Borders
“There is no risk in investing in the United States”
The U.S. economy is the largest in the world. This title has been recognized since the mid-1890s.
We might spend hours listing Differences between the US and Brazilian economiesbut this is not the focus of this article.
What you need to know is that no matter how small they are, Investing in the United States also has risks.
The country has the strongest currency in the world, the dollar, and countless economies are directly or indirectly dependent on the direction of the US economy.
Even so, The US is not out of the crisiswhether it is political, related to international markets or exchange rate changes.
Depends on the asset class you invest inwhether or not you’re investing in the world’s largest economy, you’ll need to increase your risk tolerance.
So, is there any risk in investing in the United States? simulation.
Is it smaller compared to other countries? Yes, but always remember it exists.
“Profit guaranteed”
believe Investing in US dollars is always more profitable than an investment in Brazil might eventually become trap Investor Decisions.
With international investments, be just as cautious as when investing in local assets.
Always research market options Invest in the assets that make the most sense for your risk profile and financial goals and, of course, offer the greatest potential for gains.
Remember: While the U.S. economy is more stable and a safe investment, The performance of your portfolio will depend on your investment choices.
“Investing overseas is very difficult”
Investing in international assets may require a higher degree of sophistication.
After all, the taxes, platforms and means of overseas investment are often different from those of local investment.
Nevertheless, it is true Today, financial institutions are increasingly seeking to provide convenience to investors.
therefore, Overseas investment is difficult and has become a mythgiven the current You can count on expert help or a broker with the necessary structures for international investments.
What is the truth behind asset dollarization?
Before deciding whether to dollarize your assets, Seek analysis to see if this strategy meets your needs Financial goals and risk profile.
Below we will introduce you Some truths behind dollarization.
The US dollar is the international reference
One of the benefits of dollarizing your assets is that you Present your assets in international reference currencies.
We are talking regarding a currency that has been in existence since mid-1776, which is more than 200 years different from the Brazilian Real, which was created in 1994.
also, The US dollar is a currency accepted in many countries Egypt Widely used in international business transactionsMany products, such as commodities, are traded in U.S. dollars.
The currency is also often used International Loans and FinancingFor example, you may have heard regarding Brazil’s external debt, which is quoted in U.S. dollars.
Due to its global strength, the North American currency is considered Store of Value For many countries.
almost 60% of global reserves are in US dollars Currently, in Brazil, this figure has risen to 80%.
You are protected from inflation
Investing in the U.S. dollar is a strategy some investors are looking to adopt protect from Local inflation or Real depreciation.
The fluctuation of the US dollar, whether rising or falling, Affects price dynamics in Brazil and several other countries.
Remember: according to the previous topic, we are talking regarding the largest economy in the world, whose currency is widely used in international business transactions.
When evaluating, Products priced in US dollars tend to be more expensive in Brazil And pass the price to the end consumer.
Also read | Asset Dollarization: Strategies to Protect Your Assets in Uncertain Times
Your money is tied to the world’s largest economy
You read that even investing in the U.S. doesn’t make your portfolio immune to risk. It’s true.
But it’s also true The United States is the world’s largest economy.
If the country were to fall into an unprecedented financial crisis, it is likely that the rest of the world would also be affected. The central role of Americans in the global economy.
Leaving a little assumption and considering Investing in the United States is less risky than investing in BrazilFor example, it’s important to remember that dollarizing some of your wealth will directly tie your money to the world’s largest economy.
Part of your assets will be transferred to US dollars. A currency that is stronger than actual currency in a The economy is more solid and secure than Brazil’s.
Dollarization can be This is one way you can protect yourself from the financial crisis and the possible devaluation of the Brazilian currency.
Learn more | How does Warren protect his investments during times of crisis?
More investment opportunities
Asset dollarization can also be viewed as Breaking boundaries.
We are talking regarding a currency that has international reference, Expand investment opportunities for Brazilians.
The Brazilian market currently accounts for less than 1% of global assets.
Only in the ETF market, exchange-traded funds (ETFs), are the differences apparent.
operating system There are currently more than 3,000 ETFs in the United States. Listed on the stock exchange. The Brazilian exchange B3 has only regarding a hundred of them.
Tax planning required
Dollarizing your assets requires you to incorporate tax planning into your financial planning to avoid legal issues.
Good planning can help you Maximize your income Egypt Take advantage of tax incentives existing.
Currently, some Investment Options Egypt Agreements between countries Provide investors with benefits when paying taxes involved in operations.
Therefore, consulting an expert can be an important way for you to get rich.
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