What You Can Do About a Weaker Dollar
The strength or weakness of the U.S. dollar is another macroeconomic event that individual citizens have little control over. However, if the dollar does fall, there are ways you can protect your investments — mainly by focusing on portfolio diversification.
When the dollar falls, investments denominated in other countries become more valuable on a relative basis. So, consider adding foreign-denominated bonds and stocks to your portfolio. Another asset that does well when the dollar falls is gold, so you might consider owning gold or other precious metals in your account.
Of course, if you have a diversified portfolio to begin with — which most financial advisors recommend — you should already have an allocation to foreign investments and precious metals. Take this opportunity to revisit your asset allocation and make sure you have the right balance.
