Jasper (@jasperinvests) joined me on this episode to talk about FX rates and how they impact us as UK investors. A very important topic that most aren’t aware of.
First, we discussed the S&P 500 returns for US investors compared to UK investors. Surprisingly, and we dug into the historical data, the returns can vary massively in any individual year.
There can be huge swings and differences in returns that US and UK investors receive in any given year, all because of FX.
However, over the long term, FX rates generally tend to be stable between the major currencies. Although, and as expected, in the short term this isn’t always the case.
We spoke through two ways to mitigate this FX risk and whether it’s worth to mitigate this risk at all.
Finally, we touched on global index funds and the impact of FX.
Listen to the full episode for all the details!
Timestamps
0:00 – Intro
1:02 – S&P Return UK vs US Investors
5:25 – Two Ways To Mitigate Risk
9:42 – Historical Returns UK vs US Investors
14:02 – Long Term Impact
16:17 – Do We Hedge FX Risk?
19:58 – Benefits of Index Funds
21:00 – Summary
25:09 – Outro
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Author: Ryan King