Monday , June 17 2024

How to: make money with a weak pound

The price of holidaying abroad hasn’t been the only reason thousands of us have chosen to sit tight at home instead of taking our usual Med break this year.  An extraordinarily weak pound has meant that even the essentials can cost holidaymakers dearly whilst abroad.

Now that the Bank of England has announced that sterling looks likely to be affected by the credit crunch for some years to come do we need to worry that a decent exchange rate is a thing of the past or trade in our holiday homes for something on these shores?  And is there a way to profit from the pound while other currencies are crushing it?

One way in which to earn is to invest in dollar making FTSE 100 stocks.  While the dollar remains stronger than the pound it’s a fair bet that these global players, indexed in the USA, will prove a good punt if only in the short term.  Avoiding companies involved in construction and property is a sensible strategy, whilst experts say that the safe money is in oil and pharmaceuticals with BP and GlaxoSmithKline showing promise of a profit for investors.

Fund managers and investors started taking the opportunity now to buy US stocks late last year despite warnings that it may be too early to do so expecting a profit.  Indeed US stocks are now performing fairly for the first time in fifteen years and large technology stocks (particularly Apple) are looking like a good investment.  The problem of course with buying low is that while hoping for a rise is a good strategy there’s certainly no guarantee that the price won’t fall further still.

More practical solutions are also available for those feeling enterprising on home soil.  When the local currency is hit hard buyers are forced to look closer to home for their needs.  For example with the economy as it is just now the cost of importing goods is extremely high – hence the hike in supermarket prices since the start of the downturn.  If you are able to offer a home grown product (not just foodstuff but anything which usually costs less from abroad, in large or small quantities) at a price which competes with exporters you could be on to a winner.

Likewise the increasing struggle of the pound is forcing holidaymakers to take a ‘holistay’ and encouraging visitors from abroad for whom Britain has never been such a bargain.  So while those with holiday homes abroad may now struggle if you can offer bed and breakfast or rent out a second home in the UK there’s a good opportunity to make money from the weak pound.

So while the weak sterling looks to be in for a struggle for some time there are still ways and means to strengthen the pound in your pocket with a little research and imagination.

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About John R Crawley

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