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Since this new investment system does not yet have much diversity, I was looking for different investments. One of the most interesting that I found was the Euro Pacific International Value Fund. A mutual fund? Yes, I am a bit surprised myself.

After writing many posts about how bad mutual funds are, why am I considering this one? Because it makes sense. It follow’s Peter Schiff’s investment approach. I read a few of his books and I agree with his investment philosophy. You can read about it here.

Why is this mutual fund a good idea?

I like it because it is betting that other countries will thrive while the dollar goes down in value. It offers some diversity because it invests in over 50 companies throughout the world. Also, profit is not limited to currency fluctuations because it purchases the stock of foreign companies. As those stocks rise and pay dividends, you get paid.

What is not good about this mutual fund? Like most mutual funds, this one has very high fees. 4.5% to buy and 1.77% per year. That means that if you own if for 4 years, it needs to make at least 3% per year for you to break even. That’s the majority of the profit for most mutual funds.

I think that the dollar will fall a lot more than 3% per year. And, if the companies do well, then this fund would go up 10% or 20% or more per year. If it fails do so, I would sell it.

This is the 7th investment of the new system. I would limit the risk to $500, or 20% of a $2,500 investment. Since we pay about 5% up front in fees, that means we have another $400 of losses before we would sell our position. $400 / $2,500 is 16%. So, if the price goes down by 16% or more we would sell it.

The more I look at it, the less attractive this investment seems…I may change my mind before actually buying it. Or, I may just convert it to a paper trade for now to see what happens.

Investment System Part 2

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Related posts:

1. Buy and Hold Investing vs. Hedge Funds
2. Chinese Yuan vs. US Dollar
3. Automated Trading Compared to Mutual Funds
4. Another Nail in the Coffin for the Dollar
5. New Investment System 1.0 – Part 2

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