I haven't really looked into exchange rate risks, as they haven't really played a role for me so far. But I think the exchange rate risk works against the desire for a safe solution here, as exchange rates can make a lot of nonsense in the short term. Personally, I would go for a slightly lower-yielding option in my own currency.
But as I said, I haven't looked into it that much.
But as I said, I haven't looked into it that much.
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@SchlaubiSchlumpf i.e. if the euro outperforms the dollar, does the yield in the chart fall? Or how does the exchange rate develop instead?
Would you then bet on euro bonds?
Would you then bet on euro bonds?
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@SchlaubiSchlumpf had linked the wrong ETF look again $IBTU
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@Therapeut That's exactly what I mean. A euro short bond ETF should be more stable. You can think of it as exchanging euros for dollars and then investing the money with American interest rates. Last year that was advantageous. In the long term in the past, it wasn't dramatic either. But it could be disadvantageous in the event of a dollar devaluation as part of a crisis caused by new trade conflicts in the USA, for example. My personal assessment. But I only have layman's knowledge. So you should definitely do some independent research.
Of course, there is potential for returns.
Of course, there is potential for returns.
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•@SchlaubiSchlumpf Thank you very much, I'll take a look👍
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@Therapeut @SchlaubiSchlumpf is right, if the euro appreciates against the euro, you will notice this in the price. So it can happen that you can lose (or gain) 30% in 3 years.
I therefore recommend European money market ETFs such as $CSH2
I therefore recommend European money market ETFs such as $CSH2
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•@PowerWordChill i.e. would my S&P500 ETF on a USD basis also be subject to currency risk?
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•@Therapeut It doesn't matter in which currency an equity ETF is denominated.
The S&P500 consists almost exclusively of US companies, so you automatically have a dollar dependency.
As an example, the S&P500 in dollars ( $SPY ) has made approx. 29.3% in the last 3 years. (calculated in dollars)
If you now sell this ETF and get the dollars, and then convert them into euros, you have made a return of approx. 45.3%.
A Swiss investor would only have made 25.2% with the same ETF.
So if the euro appreciates against the US dollar, you have less return, but you get more shares for your money when you buy more.
Unless you buy ETFs with currency hedging, which I would not recommend.
The S&P500 consists almost exclusively of US companies, so you automatically have a dollar dependency.
As an example, the S&P500 in dollars ( $SPY ) has made approx. 29.3% in the last 3 years. (calculated in dollars)
If you now sell this ETF and get the dollars, and then convert them into euros, you have made a return of approx. 45.3%.
A Swiss investor would only have made 25.2% with the same ETF.
So if the euro appreciates against the US dollar, you have less return, but you get more shares for your money when you buy more.
Unless you buy ETFs with currency hedging, which I would not recommend.
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•@PowerWordChill Thank you for your detailed answer🤲
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•@PowerWordChill With currency hedges, I would have a fluctuation anyway, whether I have exchange rate risk or not. The expected value for me is 0, since it can go either way, this is not a big additional risk with the volatility of an etf. But the hedge costs money. That much. That, as far as I know, it destroys the extra interest I would get in the USA
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