Do any of you know about the pros and cons of putting 401k money in foreign bond funds? I am looking to at least try to preserve what I can of my 401k and have no confidence in the stock market. Would this be a sensible option? If not, what would be better?
I have not used them but EVERBANK has foreign alternatives you might like. New Zealand, Australia etc. CDs etc https://www.everbank.com/currencies
Depends on your time horizon, non-retirement asset allocation, etc.
With domestic bond funds, you are taking interest rate risk and credit risk. With foreign bond funds, you are adding currency risk as well.
Personally, I assume that if there is a dollar collapse there will also be haircuts to those “captive” accounts such as 401(k) and IRA plans. So I don’t, for instance, hold gold or other inflationary hedges in those accounts.
Furthermore, if the dollar weakens against other currencies, I would probably want the capital gains tax treatment.
Just my opinion of course. I’d be interested in hearing others’ opinions too.