Time Is Running Out to Turbocharge Your Investments
In the real world, ninety-nine cents will not get you into New York City. You will need the full dollar. ― Bruce Springsteen, Born to Run
I remember the first time I set foot in South Africa. It was 1984. During a layover in Johannesburg on my way to Cape Town, I waited to board with a young South African.
“Theengs are getting expaynsive in this country,” he said, in a classic Capetonian twang. “Ah just paid two bucks for a beer.”
Bucks? I thought the dollar was a “buck.” It was strange to hear a foreigner refer to his own currency that way. Eventually I became accustomed to people adopting American financial slang. It was everywhere.
But I brought more with me to South Africa than preconceived notions about our currency. I brought enough of it to invest in something priced in a foreign currency … something that has paid off extremely well for me over the years.
I was able to afford this valuable asset because the dollar was strong at that time compared to the foreign currency in question.
That’s a play you should consider making, too … before it’s too late.
Like most people, Americans have a contradictory relationship with their currency.
On one hand, many of us are proud of the strength of the dollar. It’s a reflection of the strength of our economy and our position in the world. Cheap overseas vacations in countries with weaker currencies don’t hurt, either.
On the other hand, a strong dollar is bad for many of us. It makes American exports more expensive, hurting job-producing manufacturing industries. It makes imports cheaper, encouraging consumers to buy foreign goods, and harming our trade balance.
On balance, we’d all probably be better off if the dollar were a bit weaker. And that’s definitely going to happen … especially with another $1.5 trillion in federal deficits on the way, thanks to the tax cut passed by the House on Friday.
In fact, it’s already happening. The dollar has weakened against the euro significantly this year:
And this presents an opportunity for you.
Buy Now, Earn Later
Many foreign assets are priced in foreign currencies. From equities to artwork, anything priced in a currency weaker than the dollar can be a bargain, depending on how quickly prices adjust. Typically, it takes a long time for foreign assets priced in local currency to adjust to a decline against the dollar … during which time you can find some real bargains.
That’s a great thing when you’re buying collectibles or other things that don’t generate revenue streams on their own. But when you buy an asset that produces a future stream of income, exchange-rate movements can make you rich.
Let’s say you buy shares in a foreign company priced in local currency. A strong dollar makes them cheap.
But when the dollar declines in value, as it must eventually, those foreign shares — and the dividends they produce — are going to provide you with extra income because they’ll be worth more in dollar terms than when you bought them.
In other words, your foreign investments will get an “exchange-rate turbocharge.”
They Aren’t Making Any More of This Asset
It can be difficult to trade in foreign equities. It requires either a foreign brokerage account or a U.S. broker that can trade for you, charging extra fees. It’s worth doing, but as I wrote in The Bauman Letter some months back, many people are opting for exchange-traded funds (ETFs) based on foreign stock markets instead.
But there’s another way to turbocharge a revenue-producing asset play with shifting exchange rates: Buy some foreign farmland.
For example, there’s a foreign country I know well where you can buy land suitable for forestry for less than $1,200 an acre. Historically, returns on forestry are in the 10-12% range annually. On top of that, the price of this land is appreciating at about 2-5% per year.
Now, $1,200 an acre is a good deal anywhere. So is 10-12% annual revenue. But when you convert that revenue, and the value of your land, into dollars, you’ll get more dollars over time just because the dollar is weakening.
In other words, your investment will be turbocharged.
Easier Than You May Think
The cool thing about this sort of play is that it can be dead easy. Some countries have well-developed local industries to facilitate foreign investment in agricultural land … so much so that you never have to set foot in a foreign country.
Early next year, I’m going to be presenting more information about this sort of opportunity in The Bauman Letter.
But I’m going to do more than that. I’m going to be part of an exclusive event where you can explore fantastic opportunities like this in person.
Details are coming, so stay tuned!
Editor, The Bauman Letter
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