How the Rich Accumulate Dollars

Today's exchange rate could be perceived as cheap 10 years from now, indicating the need to purchase dollars from a long-term perspective.

This rise in interest rates acts as a key factor in increasing the value of the dollar, exerting upward pressure on the dollar in global financial markets.

This is due to the dollar's characteristic as a reserve currency, where all currencies must pass through the dollar in foreign exchange transactions.

Successful financial management requires understanding the dollar as a systemic standard.

Since the abolishment of the gold standard in 1971, the U.S. has maintained the dollar's status for about 50 years through the petrodollar system.

However, as the petrodollar system shows signs of weakening, the U.S. is exploring strategies to solidify the dollar's global status by empowering stablecoins as a new alternative.

Choi Hye-sil, CEO, says that the wealthy do not fret over exchange rate fluctuations but consistently purchase dollars with uniform Korean won amounts.

This method, by fixing the won, leads to a systematic approach where fewer dollars are bought when the exchange rate is high, and more are bought when it's low.

Especially since the COVID-19 pandemic, there has been a significant increase in wealthy individuals who continuously accumulate dollars as part of their total assets.

This reflects the decision of global asset owners to operate funds in dollars rather than in assets that do not generate returns, such as gold, to hedge against inflation.

They prefer to preserve asset value and generate income through dollars rather than simply holding cash to prepare for rising prices.

Choi Hye-sil, CEO, analyzed that the wealthy are actively generating returns using dollars instead of stagnant assets.

Choi Hye-sil, CEO, advises investing half of one's investable assets in short-term financial products like RPs (Repurchase Agreements) to secure an annual return of 3-4%.

The other half is invested in S&P 500 index ETFs that track the overall U.S. market, aiming for annual growth of around 10%.

By allocating these two assets 50-50, investors can achieve stable returns of around 7% annually along with exchange rate gains.

When exchange rates soar and news of inflation emerges during an economic crisis, Choi Hye-sil, CEO, recommends a strategy of liquidating some dollars and purchasing undervalued stock assets.

Since exchange rates are difficult to predict, it's crucial to hold dollars long-term and await opportunities to buy undervalued assets during crises.

Converting dollars into won-denominated assets when the exchange rate rises sharply is an effective way to turn a crisis into an investment opportunity.

Accounts under a child's name have the advantage of allowing investments with a much longer horizon than those of parents.

Funds gifted to a child can be held in dollars and then exchanged into won during economic crises, which occur approximately once every 10 years, to purchase undervalued assets such as stocks.

This hybrid strategy of dollars and S&P 500 is effective for a child's long-term wealth accumulation.

S&P 500 index ETFs focus on asset growth and accumulation.

Dividend ETFs, on the other hand, are suitable for investors in their late 40s to over 50 preparing for retirement, focusing on securing cash flow through dividends.

Dividend growth ETFs pursue both asset growth and dividends of around 3% annually, while covered call ETFs offer high dividends of about 10% annually but require caution as they may compromise future growth potential.

It is important to note that when investing in other currencies like the Japanese Yen, one must necessarily pass through the dollar due to cross-exchange rates.

Therefore, merely holding the intermediary dollar directly can yield sufficient investment effects.

Purchasing a specific country's currency guarantees the credibility of that economy, making dollar-centric investment, as a reserve currency, more rational.

It is necessary to maintain the perspective of holding dollars through periodic accumulation rather than exchanging all assets at once.

Dollars accumulated consistently in this manner become the driving force for finding opportunities to purchase undervalued assets during crisis situations like stock market crashes.

Insurance companies offer the lowest exchange fees but require long-term deposits, while securities firms charge about 8 won per dollar, and banks are the most expensive.

Kakao Pay and Toss Pay have low fees but have limits on small amount exchanges.

If the purpose is to hold dollars for a long period, considering insurance products that offer exchange rate preferential benefits and high interest rates is advisable.