A reader writes in asking about the threat of currency collapse. Mainly, will the US dollar lose value due to excess printing. And how will that affect digital nomads and expats?

Good question. And while I am no expert on economics, here are my thoughts on the situation and how to protect yourself.

1. Currency Collapse Is Real

America keeps printing money, the value of dollar keeps falling. This isn’t some goldbug conspiracy either. Many well-respected economists, investment advisors, and university professors agree. The US dollar simply isn’t what it once was, and it continues losing buying power every single year. So much so, that $1 in 1801 is now worth $0.07.

in other words, you’d have lost 93% of your wealth by holding money in a long-term savings account.

This will only get worse as the US government continues printing money, and the dollar will start losing much of its buying power abroad. Will it become worthless? Probably not. But it will move enough to cause noticeable impact on your spending, especially if you’re living off savings or fixed-income.

In Thailand alone, I’ve watched conversion rates slide between 34 Baht to $1, to 28 Baht to $1.

That might not sound like much, or seem very exciting, but it has a big impact on your expenses.

Take a look:

300 Baht lunch at 34 Baht per dollar = $8.82.

300 Baht lunch at 28 Baht per dollar = $12.50.

That a massive difference, and I’ve seen these swings hurt expats living off a specific budget. Fortunately, there are ways to protect yourself. With a little preparation, you can be well defended (and even profit from) a weakening dollar.

Allow me to explain.

2. Protect Yourself With Foreign Income Streams

If you want to profit off the dollar’s decline, you must collect income from as many currencies as possible. Or at least from currencies which will increase in value as the dollar goes down.

This might sound tough, but it’s actually quite simple. To do this, you want to buy income producing foreign assets that are currently weak against the dollar but will strengthen if US currency drops in value. Think the Canadian stock market. Right now one Canadian dollar is worth about 72 US cents. This means you can buy a stock worth 10 CAD for $7.20 USD.

When CAD strengthens, say to $1.10 USD, you now have $11 worth of stock that you bought for $7.20. And this doesn’t count capital gains or dividend payments.

There are a lot of countries you can invest in, or stocks you can purchase, but my personal two favorites are Coca-Cola FEMSA (Coke’s South American division) and British American Tobacco (which sells cigarettes all over the world). These are both solid companies, and each one provides steady cash-flow from multiple currencies.

Of course, these aren’t your only two options. And there are probably better choices floating around right now (I’m kicking myself for not buying some cheap gold miners at the start of this year because they’re not up 200%), you just have to find them.

One easy way to do this is through subscribing to a newsletter service like Top Dividend Stocks. This is a fantastic monthly publication giving you all kinds of terrific investment ideas both at home and abroad. If you’re looking to hedge (and profit) from a currency collapse, they can help. I’ve personally used the service to find many quality companies which provide constant cash flow.

3. Saving Money Never Builds Wealth, Investing It Does

There’s a good book titled The Future For Investors which shows you how to beat inflation and build long-term wealth (note: this book only covers theory, not individual stocks or assets). One of the more interesting sections of the book shows how different investments performed over time. $1 held since 1801 is now worth $0.07, while that same $1 invested in stocks is worth $597,485.

(From The Future For Investors)

In other words, currency fluctuations don’t really matter if you own assets that grow over time. This is why expats living off a fixed income or savings are hit hardest during a dollar devaluation. Whereas anyone with a business or assets does fine.

If you’re planning on moving abroad soon, use the current global shutdown to build up a hedge again dollar deflation (or similar forms of currency collapse).

Either learn a skill like affiliate marketing, or pick up an issue of Top Dividend Stocks and start looking for quality assets you can invest in. This way you don’t have to worry about cutting down on expenses or downsizing your lifestyle when the Baht or peso surges again the dollar. Instead, you can rest easy, knowing your money and standard of living remain safe.