When selecting units of account for his life is not thought immediately forex. Yet the forex can be very useful for diversifying a life insurance contract in which he already has stocks, bonds and dollar funds. This can also be a good way to protect themselves from the falling dollar
What is the investment on forex?
Investing in forex is the investment in the currency market as the dollar, euro or pound sterling. The basic principle is to "bet" on the rise or fall of one currency relative to another is what is called a currency pair. Thus the pair of the euro against the dollar is called EUR / USD.
Viewed differently, it helps fulfill a belief or theory one country compared to another. So if you think that growth in the UK will be higher than that of the United States you can buy the GBP / USD and benefit from the rise in sterling against the dollar.
This is of course a simplified explanation and establishment of a forex trading strategy requires a lot of time to be optimized.
Let's see the different ways to use forex with a life insurance contract.
Solution 1: Hedge funds
This type of fund invests in currency pairs to take advantage of currency movements relative to each other. For this, the fund manager "alternative currency" can be used several ways:
It can perform arbitration several times a year through derivatives and futures to generate gains on buying and selling currency pairs.
It may invest in low-risk funds (government bonds, for example) in the country of the currency concerned and do not cover the exchange rate risk in order to benefit from the bond yield and the change in the exchange rate .
This type of fund is interesting insofar as it wants to invest in currencies while having a contract denominated in euros. But that kind of money does not guarantee performance and volatility can be extremely strong.
Solution 2: The funds and life insurance in foreign currency
The second solution is to use a multi-currency life insurance policy. This kind of contract is offered by most of the insurance companies. On this type of contract, you can invest in a fund guaranteed dollar guy ... except that it is not in euros but in the currency of your choice (USD dollar, British pound, Swiss franc or any other currency).
This investment is safer than one solution to the extent that your investment in a foreign currency can not decrease because it is guaranteed. But the return depends on the bond rates so do not expect miracles ...
Please do not fool you: the amount of investment in currency can not decrease but you expose yourself to the increase or decrease in the dollar against the euro (this is the goal in any case not I need regular.).
example:
You have € 300,000 you want to place in United States dollars.
The company converts these into € 300,000 $ 380,130 USD (1.2671 dollar for one euro rates).
You will have the guarantee of never having less than $ 380,141 USD these.
BUT, if a year later you want to withdraw the money in euros and the dollar weakened against the euro at $ 1.35 to 1 euro. You will hear $ 380,141 USD / € 281,585 is 1.35
This solution may be suitable if you want to hold the money in another currency, while benefiting from the attractive taxation of life insurance. While understanding that the guarantee only applies to the amount in currency and not in euros.
In this article I showed you two ways to invest in the forex while under a life insurance contract. You decide if this is the kind of solution for you.
If you are against by an active trader and you want to invest in forex live, these solutions are not for you.
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