I am trying to decide whether to put some money into a basket of non-US currencies through Everbank to protect against further declines in the US dollar or whether to simply buy currency ETFs with the same money. Anyone have an opinion as to the pros and cons of these 2 approaches?
I spoke with Everbank and they charge 0.75% to transfer funds in a money market from one currency to another. So if I transfer $10K, I pay $75. However, if I keep the money in my brokerage account, I only pay $8.95 to transfer the same amount of money into a currency ETF. I am interested in keeping the funds in the same currency for months or longer. I am curious if anyone else has an opinion which is better--putting my dollars into the actual currency or a currency ETF.
I reviewed the prospectuses for the currencyshares ETFs and they seem solid to me. I think EverBank is more for the non-trader or guy off the street, which is why they get away with being more expensive.
Be very careful of the tax implications of currency or commodities ETFs. You can end up owing taxes even when you retain the ETF position, and or traded at a loss. See here: http://seekingalpha.com/article/765...futures-etfs-don-t-get-caught-in-the-tax-trap I would think twice before parking money in a currency ETF to hedge exposure to dollar devaluation. Instead you should consider an actual exchange. Talk to your own bank, if you have a good relationship you might get better rates on the exchange. Or even open up a non margin/cash FX account through a trusted broker and put on a position equal to your cash amount. That will probably be the best rates you'll get, since the spread will be very narrow. But even then, consider physical gold, TIPS. There are a lot of ways to go.