Author Topic: How to invest when your currency tanked? Paying of loans as a strategy.  (Read 1275 times)

Sjalabais

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Currency trading is a risky business, but it is also somewhat predictable, as it follows larger societal trends. Thus, I have now realized some gains of the Norwegian krone falling >30% to the dollar over the course of the last year. I have no shares, bonds or other market related investments left. Both our family's (necessary) cars are paid off, as is my student loan. What remains is the house mortgage, and I have directed all my spare funds there. My wife will devote an even bigger chunk of her money to loan deletion soon, selling off marked investments that are largely noted in US dollar. We are en route to paying off our house in maybe 5-8 years from today; at best, we own our house after living in it for 10 years while be both earn significantly less than average due to choice/part time work.

Alas, I am not entirely sure of this strategy right now. It feels weird to use our buffers to pay off a loan when other people pick up low interest loans in order to gamble for money-making-money somewhere else. At the same time, I feel like it is outrageously stupid to invest in foreign markets right now, if I am to expect that our currency will have to appreciate somewhere between 15-40% again to get back to established "normal" levels. Any rise in value for us will have to come on top of that.

What would you do?
« Last Edit: August 07, 2015, 02:17:21 AM by Sjalabais »

gooki

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Re: How to invest when your currency tanked? Paying of loans as a strategy.
« Reply #1 on: August 07, 2015, 02:21:37 AM »
Invest in the local market, pay of debt.
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alsoknownasDean

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Re: How to invest when your currency tanked? Paying of loans as a strategy.
« Reply #2 on: August 07, 2015, 02:34:35 AM »
Yeah I'm planning on just continuing to invest in the local market instead.

Kinda kicking myself for not buying some VTS a year or so ago. The ~25% drop in the AUD compared to the USD over the last year means the ETF has increased by nearly 40% YoY.

Sjalabais

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Re: How to invest when your currency tanked? Paying of loans as a strategy.
« Reply #3 on: August 07, 2015, 04:08:59 AM »
The Norwegian housing market is in a huge bubble about to implode, which affects everything from the labour to the stock market. Therefore, I am wary to invest locally (the only big business I see has bright prospects is salmon farming, but they are ruthlessly polluting our fjords - it's not where I want to put my money).

So paying off debt is still the route to go? I've been thinking to gamble on Russia, and I could bite myself in the a* for not jumping on the currency wobble when the rouble collapsed, only to jump 20% a couple of weeks later. That was highly predictable.

@akaD, I'm surprised that Australia is almost similarly affected. Commodity economies are hard hit by slight downturns...

Mississippi Mudstache

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Re: How to invest when your currency tanked? Paying of loans as a strategy.
« Reply #4 on: August 07, 2015, 06:14:32 AM »
I have no advice on where to invest, but my reaction to NOK falling in comparison to USD was to visit Norway for the first time last month. We had a great visit, and it cost us almost half what it would have cost 5 years ago :)
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Sjalabais

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Re: How to invest when your currency tanked? Paying of loans as a strategy.
« Reply #5 on: August 07, 2015, 11:38:35 AM »
Hehe, that is certainly a good decision! Where did you go? We've had awful weather this summer ("summer"; snow will not melt above 1000 metres until new snow arrives) - I hope you picked some good weeks!