Personal Finance
Bridgewater Associates founder Ray Dalio once said, “Cash is trash,” and, “Get out of cash.” Evidently, he was concerned about the erosion of the value of the U.S. dollar (USD) and how this could impact one’s portfolio.
Fast-forward to 2025, and a Reddit user asks, “[W]hat are we doing to protect against the devaluation of the USD?” It’s a lightning-rod question that will prompt a variety of responses and solutions. Some answers may be better than others, and every investor should consider USD alternatives to protect his or her portfolio from the dollar’s long-term decline.
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- Holding too much cash could have a negative impact on the value of your portfolio over time.
- The simplest way to protect against USD devaluation is to own low-fee ETFs and inflation-resistant assets like gold and Bitcoin.
- Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; learn more here.(Sponsor)
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Have Some Dry Powder
Surely, you’ve noticed that today’s dollar doesn’t have the purchasing power that it did in previous decades. Alas, long gone are the days when one could buy a typical brand-new car for $10,000 or a new house for $50,000. Now, the average new car costs just shy of $50,000 and the USD has been devalued by 11.24% since its year-to-date high on Jan. 13, just one week before the Trump administration arrived in D.C.
But don’t draw the wrong conclusion from Dalio’s “cash is trash” warning, though. It can destroy your portfolio’s value over time to have an all-cash position for too long, but the USD is still a highly liquid and globally accepted form of money.
Consequently, it makes sense to have some cash handy for emergency purchases. In addition, it’s a good idea to keep some cash as “dry powder” to buy stocks and other financial assets when they’re trading at a discount. That said, it’s smart to identify one or more USD alternatives so your portfolio’s overall value can grow instead of deteriorate over the years.
Let’s Not Make It Difficult
Certainly, it’s sensible to invest in assets that tend to appreciate in value. That’s probably a better idea than just holding the USD, which lost an eye-watering 11% of their relative value in the first half of 2025.
On Reddit and elsewhere, there’s a plethora of ideas about where to store one’s wealth instead of hoarding too much cash. However, some of these ideas require a level of experience, expertise, and interest that most people won’t have.
Three commonly cited dollar-alternative strategies are:
- Owning investment property to rent out and/or eventually resell at a higher price
- Holding foreign currencies
- Trading international stocks
Succeeding in residential real estate investing is easier said than done. Between squatters/non-paying renters, insurance and HOA headaches, legal hassles, natural and non-natural disasters, and market fluctuations, a lot can go wrong in the real estate business.
Meanwhile, profiting from foreign currencies and/or international stocks is practically a full-time job as it’s quite research-intensive. Plenty of amateurs have tried and failed, and not everyone has the time and resources to become an expert at foreign investments.
Set It and Forget It
In contrast, there are inflation-resistant USD alternatives that are amenable to a “set it and forget it” strategy. Perhaps the simplest dollar-alternative strategy of all is to just buy and hold one or more exchange-traded funds (ETFs) that track the S&P 500 stock index.
The S&P 500 includes roughly 500 high-quality blue-chip stocks, and it’s widely diversified so you won’t be exposed to excessive price volatility. So, you can exchange some of your dollars for a low-fee, highly liquid S&P 500 tracking ETF, such as the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) or the Vanguard S&P 500 ETF (NYSEARCA:VOO).
Another “set it and forget it” USD alternative is gold bullion. Dalio actually recommended this, proclaiming, “I think you have to have a certain amount of gold in your portfolio.”
Gold’s value against the USD has increased considerably over the years and during the first half of 2025. The same could be said about Bitcoin (CRYPTO:BTC), the most popular cryptocurrency in the world.
While gold has a naturally limited supply, Bitcoin’s supply is artificially limited to 21 million currency units. Perhaps that’s why some folks refer to Bitcoin as “digital gold.”
Just be aware that Bitcoin has only been around since 2009 and isn’t time-tested like gold is. Furthermore, even though Bitcoin’s price has grown against the USD over the years, it’s been a bumpy ride with a high degree of volatility.
Moves to Make Now
There are moves that you can make today to start protecting your wealth against dollar devaluation. It’s fine to keep some cash as “dry powder,” but someday you’ll be glad that you diversified into one or more inflation-resistant assets.
One good starting point is to accumulate shares of the SPY and VOO ETFs. That way, you’ll be instantly diversified into hundreds of large-cap stocks.
Then, you can consider purchasing some gold bullion. Collecting gold bars and coins can be enjoyable, and there’s a robust online community of “gold bugs” to interact with.
To further protect yourself against USD debasement, you might consider buying a small quantity of Bitcoin. Just be prepared for Bitcoin’s price volatility, and don’t over-invest in cryptocurrency. Finally, it’s wise to consult with financial advisors/experts when making money-related decisions so you won’t have to venture into dollar-alternative investing by yourself.
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