Currency risk

This is the type of risk that comes from the change in price of one currency against another. It arises when you have your money invested in assets denominated in another currency, the risk being that the exchange rate will move against you and reduce their value. If you are a British investor with stocks in the US, whatever return you get is affected by the change in the stocks’ price and in the US dollar against the pound. If you realised a return of 10% on your stocks but the US dollar depreciated by 10%, you’d have made no gain. Investors or firms who have operations or assets abroad will face currency risk unless they hedge their positions.

• See Tim Bennett’s video tutorial: Depository receipts: An easy way to invest in foreign firms.

MoneyWeek magazine

Latest issue:

Magazine cover
Don't be spooked by Putin

Take a punt on eastern Europe

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues
Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.