Although not well known,internationalization is animportant portfolio option.Over the past 2 years, theUS dollar has devalued by over 40%compared with major European currencies.During this time, a bank accountin euros that paid 2% interest wouldhave appreciated 45%, outperformingevery other asset class. In reality,investors would not earn 45%, butrather 4%; the rest would comprise theUS dollar devaluation.
With the US Treasury increasing themonetary supply of dollars by $1 billionper month, the greenback's valuewill decline inversely. To keep globalpurchasing power intact, physician-investorshave two options. They canhold US dollar assets to outperform thedevaluation, or they can place someinvestments into alternate currencies orhard assets to hold or increase the valueas the dollar declines. Here are a fewother ideas to consider:
• Diversify currencies. Achieve currencydiversification using the Swissfranc, British pound, Canadian dollar,Australian dollar, or the currency ofyour choice.
• Put assets into precious metals.While gold, silver, platinum, and palladiummight not be sexy, if the US dollarcollapses under the weight of over-extensionthey'll be insurance. If you don'twant to hold bullion, some countries willissue certificates that represent a physicalamount of metal. They trade at themetal's spot price, with daily liquidity.
• Invest in international real estate.Foreign real estate can often be purchasedin US dollars and sold in thebase currency of that country or anotherinternational currency. Other thanCosta Rica and parts of Mexico,Central American real estate is stilllargely undervalued and being discovereddaily. A prime building lot on theWest Coast, commanding more than $1million in California, could cost$50,000 in Nicaragua.
• Utilize real estate without physicallypurchasing it. For example, investin a foreign real estate fund, whichoperates similar to a US real estateinvestment trust. One British fund consistentlyposts 12% to 15% returns inBritish pounds. In the past 2 years, thereturn on investment from a US dollarperspective would have approached70%. Other funds exist in ContinentalEurope, Canada, Central America,and Australia.
Joel M. Nagel, a frequent writerand speaker on international assetprotection concepts, is the creatorof â€œThe Physician's Asset ProtectionPlan.â€ He practices law inPittsburgh, Pa, creating legal structuresaround the world to protect his global clientele.He welcomes questions or comments firstname.lastname@example.org, or visit www.nagellaw.com.