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How to protect your money from currency devaluation
We have seen the Kenyan shilling depreciate at an alarming rate over the past few years, especially last year. It is said that the Kenyan shilling depreciated by over 20% last year.
Most people are looking for ways to hedge against the weakening shilling. Here are 5 ways you can do this.
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Invest in USD MMFS
To curb the effects of currency depreciation it is only wise to first convert your disposable income into a stronger currency like the US dollar. But it does not end there.
why? Because we know that keeping your money in a bank account is not wise, rather giving your money a job is the way to go.
Consider investing the money in a USD money market fund account.
A USD money market fund is essentially a collection of people’s money that is used to invest in dollar-denominated assets such as USD fixed-income deposits and Eurobonds.
Here are a few USD MMFs in Kenya.
2. Invest in foreign stocks
Yes, you can invest in shares listed in offshore markets like the US stock market while in Kenya. You can own companies like Google, Facebook, and the like.
By doing so you stand the chance to not only protect your money against the weakening shilling but also grow it through capital appreciation and dividends.
3. Invest in offshore ETFs.
ETFs stands for exchange-traded Funds, this is essentially a basket of assets that you can own. For example, there are stock ETFs and bond ETFs. An example of a Stock ETF is the Vanguard S&P 500 which tracks 500 of the largest us companies.
4. Own precious metals
yes, you’ve read that right, you can own precious metals like physical gold also known as gold bullion. The best part about owning physical gold is that its value is not pegged on any currency.
You can get gold from dealers and internet retailers like JMBullion, APMEX, SD Bullion etc.
5. Investing in Gold ETFs
Yes, there are gold ETFs that mirror the value of gold. You can own these gold ETFs by buying them like you would buy stocks.
In Kenya, we have one gold ETF, the only ETF so far. This gold ETF is known as the ABSA New Gold ETF.
Other gold ETFs include Physical Gold Share ETF (SGOL), ishares Gold Trust (IAU), and SPDR Gold shares (GLD).
There we have it 5 ways you can protect your money from currency depreciation/devaluation. Let me know what is your favourite method from the list.
As always, remember to Do Your Own Research first before investing in anything as investments have many risks attached to them. This was for educational purposes only.
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