As I talked about in one of last weeks posts, there is more than just one type of investing. Not only do people invest in stocks, but some invest in foreign currencies. Investing in foreign currencies is super similar to investing in stocks, but there are a few things you should know:
- Investing in foreign currencies is a bit more complicated than you might think. Because the value of both your countries currency and the currencies you invest in is always changing, you have to understand that if the value of one of the currencies you invest in, say the British Pound, appears to go down it may actually be because your currency, maybe the Euro, went up and the British Pound actually didn’t change one bit.
- World events are just as important to the stock market as they are to foreign currencies. Usually, if something happens to the economy in the country/countries where the currency is used the value of the currency will change. One good example of this happened a while ago when the value of oil plummeted. As a result the Canadian economy didn’t do as well as it once did, and the value of it’s currency dropped quite a bit.
- Investing into currencies is slightly more dangerous, in my opinion, than investing into the stock market. There are less things that could impact a companies stock price than there are things that could affect the value of a currency, but this is just my opinion, some people believe that it is the other way around.
That’s all for now, Ben