How to protect your wealth from the euro crisis

British investors might feel comfortably insulated from the eurozone crisis. But it would be a mistake to get too comfy. Here's how to make sure you're cushioned.

As a British investor, you might feel comfortably insulated from the eurozone crisis. But it would be a mistake to get too comfy. Both British banks and our economy in general have hefty levels of exposure to the eurozone. Any slowdown in economic activity there will have some impact in the UK, and any default could lead to our banking system needing further propping up. So we're happy to stick with our long-running view that when it comes to equities, you're best off with sturdy, high-quality defensive stocks that can keep paying dividends even when times get tough.

If you're looking for a more direct play on the eurozone's woes, and you can stomach the risk, there's always currency trading. The simplest way for retail investors to trade currencies is by using spread-betting, but you must familiarise yourself with the way this works beforehand, and understand that you can lose more than your initial deposit, very rapidly indeed, if a bet goes against you. Learn more about spread-betting here from video tutorials to sample trades. The way things appear at the moment indicate that the US dollar may be back in recovery mode, which suggests that shorting the euro against the dollar could well continue to pay off, just as it did during the Greek crisis earlier this year. (Incidentally, the strengthening dollar could also prove to be good news for Japanese stocks, as John Stepek says: The future is still Japanese).

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