uski t1_j6hovth wrote on January 30, 2023 at 12:10 PM

Reply to comment by hearnia_2k in Is prepaying your rent a smart idea? by MailsDavis

The point is that if you get 5.89% on a currency that devaluates, you are better off buying foreign assets. It's important because people come here and say they make an obscene amount of interest, but 100% is crap if you have 200% inflation. We need to compare apples and apples and interest rates alone don't mean anything unfortunately.

And as to the timing this is something universal that affects all types of investments. No investment is eternally and universally good.

hearnia_2k t1_j6hppul wrote on January 30, 2023 at 12:19 PM

Exchange rates that consumers get either have fees, or are not bank rates, so each currency conversion also has a cost. So a higher rate in a foreign currency, or a currency which has lower inflation still does not necessarily make a better investment, especially for something short term like in the scenario OP has.

Pretty much all currencies (with the exception of the Swiss Franc), over time, go down in value - that is simply inflation. The fact it's happening is not important, the important part would be about whether one currency has higher or lower inflation than another, and then factor in both and any fees and effort for the investment. Buying foreign currency could also bring tax and accounting implications too.

Your commnt reads as though the only important rate of inflation is the one of a foreign currency to the investor; but the investors local currency inflation rate is at least as important.

Over 10 years EUR has dropped agains USD, but over 6 months EUR is stronger against USD, and continuing in that path right now.

Based on your previous comment everyone should have their investments in Swiss Francs most likely.