New York (Money Magazine) - Remember that a falling dollar is only a serious problem if it happens too fast.

If you have a blue-chip stock fund, many of the big U.S. companies you own stand to gain if a cheap dollar opens up overseas markets to their products.

That said, the big dollar swings we've seen are a reminder of how important international and inflation-hedging investments can be to a well-diversified portfolio.

Since these assets often gain when the broad U.S. market falters, they'll smooth out your returns over time.

What's more, they may do best just when higher interest rates and retail prices are pinching your pocketbook.

So whatever the dollar's near-term prospects, these four investment strategies make long-term sense:

Many financial planners say that, as a rule of thumb, you ought to have 10 percent to 15 percent of your portfolio in non-U.S. stocks.

The currency play is just one part of the appeal.

Many overseas markets look cheaper than ours based on price-to-earnings ratios, and they often follow a different economic cycle to boot. But when the dollar drops, an American investor who holds a stock that's denominated in euros makes money even if the share price doesn't budge.

The simplest way to get the diversification benefit of foreign stocks is through an international fund that doesn't hedge its exposure to overseas currencies, such as Artisan International (?ARTIX).

Just remember that foreign funds aren't a perfect haven from dollar drops, since the stocks can still lose money even after you account for currency moves. That's exactly what happened in 2002, when the greenback fell and foreign funds still racked up double-digit losses.

If most investors could benefit from a foreign-stock fund, overseas bonds offer a somewhat narrower appeal.

They can be a much more direct bet against the dollar than the equity funds, since a greater portion of their return may come just from currency swings. (After all, the bonds themselves will generally have fairly modest gains or losses in most years.)

The problem is that many international bond funds hedge their currency exposure, eliminating some of the advantage when the dollar falls.

One fund that stays mostly unhedged is American Century International Bond (BEGBX). Foreign bonds could be 20 percent of your bond portfolio, says Andrew Clark, a senior analyst at Lipper.

Remember, one of the risks of a weak dollar is rising prices.

Commodity investments are classic inflation fighters, and many planners recommend a 5 percent to 10 percent allocation in one.

Pimco Commodity Real Return Strategy (PCRAX) fund tracks an index of commodity contracts, benefiting directly from rising prices for oil, precious metals and agricultural goods.

This can be a volatile investment -- in 1998 the index Pimco tracks dropped about 30 percent -- so it's suited only for those with plenty of stomach for short-term risk.

A more conservative way to make a similar bet is Charles Ober's T. Rowe Price New Era (PRNEX), which invests in the stocks of commodity producers like mining companies and oil conglomerates.

The most straightforward hedge against inflation is inflation-protected Treasuries, or TIPS, which are designed to automatically pay more income as the consumer price index rises.

You can buy them directly by going to treasurydirect.gov, or get an entire portfolio of them through Vanguard Inflation-Protected Securities fund (VIPSX).

TIPS are a pretty conservative investment, so if inflation and the falling dollar really worry you, you can consider making them the lion's share of your overall bond portfolio.