The stock market, the mistrust in the US dollar, inflation, and instability in the global market all have one thing in common: they’re eating away at retirees’ portfolios. If you’re a soon-to-be retiree, chances are you’re looking at your funds with great worry; value is lost, and no one is taking responsibility. So, what are you going to do about it? Below we detail the benefits of investing in alternative assets in 2022.
Inflation is a major problem for investors today, because it tends to reduce the value of your investments. This forces you to look for investments that benefit from inflation while avoiding investments that are hit hard by it, like gold for example as shown here. Inflation is especially problematic for stocks, since they tend to fall in value during periods of high inflation. Luckily, there are several alternative investments that will hold their value better than stocks during an inflationary period.
TIPS, or Treasury Inflation-Protected Securities, are a good example of an alternative investment that provides a balanced portfolio. TIPS come with maturity dates of five, ten, or thirty years. Another option is growth stocks, which are publicly traded shares that are expected to grow faster than the overall market. Growth stocks are also ideal for inflation protection, as these companies have the power to raise their prices when there is a spike in inflation.
Another alternative investment is real estate. Real estate is an excellent hedge against inflation, as it has tremendous intrinsic value and is a tangible asset with a limited supply. Because of its limited supply, real estate tends to hold its value over time.
Don’t Rely on Fiat Currency
Fiat currency is a currency issued by a government and has no inherent value. Its value is determined by the supply and demand for it. This is one of the fundamental problems with fiat currency. However, the government can print as much as it wants, which can lead to hyperinflation.
Fiat currency is also unstable, and tends to depreciate explosively when things go wrong. It requires a great deal of coercion to create it, much of which is invisible to the public. It also allows governments to use it to fund wars, selective bailouts of influential groups, and other forms of government spending.
Fiat currencies are based on the idea of value subjectivism, which makes them fundamentally unstable and philosophically flawed. In addition, they are based on a faulty model of human consciousness, a model which makes people’s minds unstable and prone to failure.
The fiat/petrodollar system also causes massive booms and busts in developing countries. Since developing countries’ debt is denominated in dollars, it fluctuates dramatically depending on the US government’s policymakers. Because of this, developing countries are forced to tighten their monetary policy during recessions to protect their currency. In addition, it leads to the creation of extremist groups.
In order to maximize returns and minimize volatility, it is important to diversify your investments. This can be achieved by purchasing a diversified portfolio that consists of stocks, precious metals, alternatives, and cash. Exchange-traded funds (ETFs) can provide this diversification. By purchasing 10 ETFs, you can invest in a wide variety of assets.
Diversifying your investment portfolio will help you protect your assets and keep you financially secure during these times of uncertain market conditions. There are many ways to do this, including diversifying your investments by industry, location, and asset class. This way, you can reduce the impact of a bad performance.
In addition to traditional stock and bond investments, investing in real estate can help diversify your portfolio. You can invest directly in property, or you can purchase shares of companies that offer rental properties. You can also invest in Real Estate Investment Trusts, which hold real estate as tenants.
Bet on Something Reliable – gold and silver
The two metals have risen in value over the past few years. Gold hit a recent high in August 2020, and silver enjoyed a meme-inspired rally in February 2021. Now that the asset prices are trending in the right direction, investors are looking to hedge their bets. Silver and gold are both good investments, and rising prices are positive for inflation.
The price of gold is rising faster than silver. But silver still has room to grow. These two assets are also more stable than equities, which are more volatile. Investors are buying in to take advantage of the next upswing. So, how do they compare?
As we enter the future, we must understand that the market moves in mysterious ways. Despite historical data, no one can guarantee the growth of a particular asset. Nevertheless, silver and gold prices may climb higher than gold. The current geopolitical tensions and COVID scares are contributing to the volatility of precious metal prices.