2024-05-16 12:04:39
Safety is usually one of the pillars that investors look for when investing in financial markets.
Regardless of whether your risk profile is conservative or aggressive, economic uncertainty in a country like Brazil will always create mistrust when investing.
Are my assets well protected in a financial crisis?
Is it worth investing my money in different asset classes?
How can I always protect my investment?
These are some of the questions that come to investors’ minds.
Currently, dollarization of assets may be one of them. Strategies for protecting assets during uncertain times.
In this article, you will learn why dollarization is important during times of economic uncertainty. Five strategies Dollarization Protect your investment from market fluctuations.
Good read!
Why is dollarization important in uncertain times?
By dollarizing your assets, you Convert some funds into USDTherefore, your assets are no longer directly affected by the fluctuations of the Brazilian market, but are instead linked to the economy of the United States, the world’s largest economy.
In addition, there are other reasons why asset dollarization has become a trend. Options for those seeking to understand how to protect their assets during uncertain times.
Watch some:
Strong Currency
Historically, the U.S. dollar is Currency is stronger than actual currency.
Investors seem to be increasingly understanding this.
According to central bank data, Brazilians transferred more than $45 billion to overseas accounts in 2023. 12.5% increase compared to 2022.
The strength of the dollar against the real was so great that since the Brazilian currency entered circulation, its value was higher than that of the US dollar only in its first few years (1994 to 1999).
However, the appreciation of the real was possible because the Brazilian government at the time adopted a policy of controlling the exchange rate of the US dollar. The goal was to stabilize the country’s economy, which was experiencing hyperinflation.
Small fluctuation
The above reasons are also reflected in currency fluctuations.
The US dollar is the strongest currency. Often suffer less than the real situation In market fluctuations.
A word of warning here: this does not mean that the dollar will not fluctuate. On the contrary, Financial market volatility is common Investors need to understand how much risk they are willing to take based on their risk profile.
What we want to say is Generally speaking, the US dollar fluctuates less than the real.
Learn more | What drives the price of the US dollar? A complete guide to the factors that influence the exchange rate
Guarding against inflation in Brazil
Keep Purchasing Power This is something investors must consider when entering other markets.
To achieve this goal, it is important to ensure that your investments maintain a positive real return even during periods of high inflation.
Dollarization could be one way.
The US dollar has an almost direct relationship with price dynamics in Brazil.
Since the US dollar is the currency of the world’s most powerful economy, any changes in the dollar will affect many aspects of other countries’ economies, one of which is the price of products.
When the dollar appreciatesproducts priced in US dollars, that is, generally imported products, will become more expensive after conversion into actual prices, Direct impact on the pockets of Brazilian consumers.
Five strategies to protect your assets during uncertain times
Do you know some reasons? Dollarization becomes an important ally in asset protection In times of economic uncertainty.
Now, You have some methods to choose the best strategy Migrate your assets to USD.
When investors choose to dollarize, a range of investment options emerge, and it is normal to feel confused at first.
If you choose to invest in the U.S. stock market, be aware that there are more than 6,000 listed companies in the U.S., about 15 times as many as in Brazil.
That’s a lot of options, right?
that’s why, It is important to note how to protect your assets during uncertain times. This way there will be no impact when migrating to USD.
Check out some strategies:
1. Diversification
The practice of dollarizing assets has been considered a way to diversify investments.
In this case, the same diversification strategy used for Brazilian assets is applicable.
What you must pay attention to is what asset classes your money will be invested in abroad.
The US market is approximately 63 times larger than the Brazilian market, which is also reflected in The number of options the investor has When you allocate money abroad.
Therefore, choosing to diversify your investments in the U.S. market is one way to protect yourself from the risks of investing in U.S. dollars.
Remember, you can invest in international investment funds, ETFs, BDRs, international managed portfolios, or directly in assets here at home – U.S. stocks and U.S. Treasuries.
2. Fixed asset investment
Dollarization can be a good strategy to protect your investments during times of local crisis.
Yet few people care.
oh The same care What you have to invest in Brazilian assets should be used to invest abroad.
Therefore, an effective strategy is to Invest in solid assetssuch as U.S. Treasury bonds.
If you choose the U.S. stock market, another option is to focus on sectors or companies that have historically shown resistance during times of economic uncertainty.
3. Investing in stable countries
Even if your assets are dollarized, you don’t necessarily need to invest only in U.S. assets – although your dollarized assets will always be indirectly linked to the North American economy.
If you feel safe, you can look for other options in the market and invest in economically stable countries.
This practice can help you reduce the risks associated with geopolitical events or economic crises in a single country.
4. Exchange Fund
If you are not willing to choose assets to invest in USD, one option might be Foreign exchange funds.
The strategy of such funds is to always monitor the exchange rate changes between the local currency (in this case, the real) and the US dollar.
This shows that the profitability of the exchange rate protection fund Varies based on the performance of the currency to which the asset is linked.
Learn more | FX Protection Fund: What it is, what it does, and how to invest in practice
5. Professional financial advice
A diversificationA Searching for more solid assets and countries and Foreign exchange funds They can indeed be an option to protect assets during times of local uncertainty.
But always remember: Your property is a serious matter and deserves all the necessary care.
If you need to protect your assets or have concerns during uncertain times, It is recommended to seek guidance from a financial advisor professional.
Experts can help you assess your financial situation, set investment goals, and develop a personalized strategy based on your financial objectives.
Looking for guidance on managing your wealth? Use the button in our menu to open your Warren account and contact one of our experts.
Want to know more? Read on and explore everything we have in store for you
1721918374
#protect #assets #uncertain #times
