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There are different periods in life when the economy has become uncertain, and when times like this come, people always wonder what they can own in case of a dollar collapse. Economic uncertainties are always present, and learning to manage your finances and protect your wealth is essential.
The U.S. Dollar is known as one of the strongest currencies in the world, but in the case of an adverse global event that can affect the economy, you will notice a drop in the dollar's value. This also affects your traditional investments like stocks.
The guide below covers the best ways to keep your wealth secure during economic turmoil, so continue reading below.
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Investments to consider
In the case of economic uncertainty or the falling dollar value, here are the top five assets you should consider investing in instead.
Precious Metals
Precious metals are often considered a universal currency because they can be used anywhere. But that's not why this type of asset is included on our list. Precious metals like gold and silver are safe-haven assets, protecting your wealth from the dollar collapse. While the value of paper money can reduce during economic uncertainties, precious metals are always valuable. They might even increase in worth since there will be high demand during these times.
Remember that the supply of precious metals is limited, allowing their value to hold on over time. During periods of inflation and other economic downturns, you will notice that most investors move towards gold because it's highly valuable. Also, silver has become more and less popular based on economic trends as it is used in various industries.
Gold and silver are the most popular assets, but these are not the only precious metals. Other options that you can consider include the following:
A significant downside of investing in precious metals is the lack of income. It mainly functions as a store of value, not to gain profit. You can expect the price of precious metals to increase due to high demand during economic uncertainties, so ensure you purchase them on time.
You can purchase physical gold or invest in a gold IRA, which is ideal for those planning to retire.
Investing in Gold IRAs
A gold IRA is a self-directed individual retirement account that allows those planning for retirement to investing in gold physically through bullion or coins or related securities like gold ETFs and mutual funds. You can simply work with a custodian to set up your gold IRA and start investing in gold, silver, platinum and palladium, the approved precious metals.
You can set your gold IRA up with pretax funds or a Roth IRA with post-tax money. You won't store the gold yourself; the custodian firm will store it and manage the account. The contribution limit for gold IRAs is $6,500, and investors over 50 can contribute an additional $1,000.
A gold IRA is an excellent idea if you want to diversify your IRA and act as a hedge against financial uncertainties. You can keep a small portion of your assets in the gold IRA in case of losses during inflation and invest the rest in physical precious metals.
Best Gold Companies To Invest With
The world of precious metals is complicated for beginners, and when you want to make investments in case of a dollar collapse, you should work with a reliable company. These companies act as custodians to manage your gold and silver investments and provide storage services. Here are our recommended gold companies:
Augusta Precious Metals (WINNER)
Augusta Precious Metals is an ideal choice for those that want to diversify their investment portfolio with either physical precious metals or a gold IRA. Assuming you can afford the minimum investment of $50,000, Augusta Precious Metals is a great choice.
It's also ideal for beginners because they educate their customers so you can take time to understand your goals and work with a dedicated agent throughout the time you invest with them. Augusta Precious Metals has primarily positive reviews online that you can benefit from.
#2. Goldco
Goldco is a leader in the precious metals industry, especially in IRAs. Their team lets you get precious metal coins and bars directly or prepare for retirement. Goldco also has an A+ rating from the Better Business Bureau and has gained a lot of positive reviews.
One of the highlights of using Goldco is the flat fee structure, unlike other companies that base the fee on a percentage of your assets. You must pay $50 when setting up your IRA, which is much cheaper than their competitors. Despite the affordable fees, the minimum investment threshold is $25,000.
American Hartford Gold allows you to open a gold IRA with only $10,000, but generally, there is no minimum investment threshold. It also offers very low fees that allow beginners to get started. If you're moving to American Hartford Gold, you can benefit from the free gold IRA, with free storage and insurance for up to three years.
American Hartford Gold allows you to buy gold and silver coins and bullion at competitive prices, but it isn't easy to find their pricing on the website. Unlike other custodians, they also don't provide you with palladium and platinum investments.
Real Estate Investments
While precious metals are a top choice for protecting you in case of a dollar collapse, you should also consider investing in real estate. Real estate is known as a wise investment because even if the dollar crashes, it will always remain valuable.
Historically, real estate has been effective as a hedge against inflation. Real estate value usually remains intact even when the dollar loses its purchasing power. It can become more affordable for you to buy, too and will help you protect the value of your wealth.
Real estate investments also provide dividend payments through rental income from tenants. Rent and property values are connected to the rising consumer prices during inflation, so you can receive more profit and protect your wealth by purchasing real estate.
Foreign Currencies
Another good option for investment if the dollar collapses, is foreign currencies. Owning a foreign currency will act as a safety net against dollar depreciation. The U.S. Dollar is the world's reserve currency, but owning a foreign currency increases your odds of surviving a dollar collapse and will help you rebuild your fortune when the dollar fails.
Most investors prefer the Japanese Yen, Chinese Yuan, Norwegian Krone and European Euro. Including foreign currencies in your portfolio also helps in diversification and will give you something to fall back on if the dollar is wiped out. Keep in mind that no fiat currency is guaranteed to protect your wealth.
Foreign Bonds
When considering investment options, people look at mutual funds, stocks and bonds, but it might be hard to decide where to keep your money if the dollar collapses. If the depreciating dollar is your concern, you should go for foreign bonds. Foreign bonds are priced in other currencies, and the value will rise if that of the dollar goes down.
Stocks and mutual funds are dollar-denominated, so they lose their value in case of economic uncertainties. Foreign bonds provide investors with the potential for stability and growth. Also, foreign bonds have lower interest rates than U.S. bonds since the inflation rate in foreign countries is higher.
Collectibles
Many investors put their money in other collectibles aside from the stock market to protect their wealth from inflation. You can consider tangible assets like art, rare coins, and wine. The value of the portfolios usually suffers during market downturns, so it might be a good idea to diversify your portfolio to include collectibles.
Collectibles are safer since they are more stable during economic uncertainty. If you want to protect the value of your assets during a dollar collapse, start by looking for the rarest items.
Can The U.S. Dollar Collapse?
The U.S Dollar has been at the edge of collapse many times, but it has also been seen as a safe haven investment for many years. The dollar can collapse if there is economic instability and inflation, causing a drop in value. The Federal Reserve tries to increase the money supply and provide higher interest rates to stabilize the economy and prevent the dollar from collapsing.
If the Federal Reserve does not act, the American dollar could lose its status as a safe haven currency and value. So, the dollar can collapse, except that it would take more effort for this to happen.
What To Expect from a Dollar Collapse
The entire stock market will be highly affected during a dollar collapse, although you cannot predict the future. This period of uncertainty will increase the cost of American exports compared to other countries. The demand for American goods and services will reduce, making American companies unable to repay their debts.
Stock prices and profits will be affected too. This will eventually lead to rising costs and expenses of goods and services. The dollar's depreciation will have a ripple effect on the U.S. economy at the end of the day.
Preparing for an Economic Downturn
Aside from investing in precious metals and real estate, there are other things you should do when the dollar's value is going down. For one, you should put a food storage plan together. Any price hikes and food shortages during inflation can be dealt with when you stock up on non-perishable food items.
There are different ways to build up your food storage. You can use sales and discounts but also grow vegetables and rear animals for meat. Part of preparing for an economic downturn should include storing food, even if you're investing in safe-haven assets.
You can also stock up on survivalist supplies. You should store medical supplies, water and food, and you can exchange these for other supplies during these times. This allows you to keep an emergency fund in place. All these survivalist items should be prioritized when approaching a dollar collapse.
Remember that traditional assets are insufficient for investment when the dollar's value decreases. Most people will run into precious metals and other investments if they can afford them. The good thing about some alternative assets is that even those on a tight budget can get started by investing a small amount in REITs, gold ETFs, gold mutual funds and more.
Final Thoughts
Our complete guide lets you know what to invest in if the dollar collapses. You should consider investing in non-traditional assets like precious metals, collectibles, real estate, foreign currencies and foreign bonds. If the dollar collapses and other traditional assets fail, these will be the new options to protect your wealth.
These assets allow you to achieve financial stability if a dollar collapses, as their value will most likely increase. Keep in mind that investment is always risky, so you should research all you need to know before putting your money in.
