How To Lose Debt

Not for the faint of heart, people do make money investing in currencies of various nations. Each nation’s currency rises and falls due to market forces, including trading deficits and geopolitical occurrences.

Just like the commissions paid on stock transfers, most large commercial banks will allow you to trade, that is, buy and sell foreign currency for a small transfer fee.

The more esoteric the country’s currency is, the harder it will be to buy or sell. In other words, if you are trying to buy or sell the Euro, Europe’s main multi-country currency, it will be easy. But if you are trying to sell whatever the dollar equivalent is in the South African country of Benin, it may not be so easy.

There are companies on the web like Forex.com http://www.forex.com that allow you to buy and sell foreign currency for a small commission. They will even allow you to set up a practice account to show you how the system works and allow you to practice with fake money.

The reason why I say it is not for the faint of heart is that a country’s cash is not unlike an IOU from that political subdivision. A contract is only as good as the people, company, or in this case country that enters into the contract. If you were to have purchased 1 million in Iraq’s Dinar ($3.2 million dollars) just prior to the fall of Saddam Hussein’s regime, the value of that currency would have fallen to about $875 US dollars in today’s market. Get the picture?

Currency trading is also extremely volatile. It can go up or down hundreds, perhaps thousands of times during a trading day, so if you are not watching your portfolio like a hawk, you may lose money. Remember, it is not the country’s currency that is actually rising or falling. A dollar today is a dollar tomorrow. It is the relationship of the country’s currency to other country’s currency which causes the rise or fall in the value of your currency portfolio.

For example, if you were holding on to U.S. dollars on the day 9/11 happened, which many of us were, those dollars were worth less against other major currencies on 9/12. Same is true when governments decide to print dollars to generate stimulus money. The value of the currency is reduced against other major currencies. Aren’t we seeing that happen in the form of inflation? Just wait!

So my advice here is to only invest what you are willing to lose. Also, you should fully understand the intricacies of the currency markets before investing one cent. That being said, many large international companies “park” currencies in various countries’ “dollars” overnight to profit from the exchange rates.