Posts Tagged ‘alternative invesment strategies’

Are we heading for inflation? Maybe it will be deflation? Any ideas? Even many of the experts are so it is hard to be sure of which assets to buy. In an environment like this I believe that you should consider alternative investments. No one can be sure of what is to come but we can do our best to prepare for it.

If we do see deflation then it is a good idea to hold cash. In deflationary times cash actually increases in value. This is one of the reasons that policy makers don’t like deflation. People don’t spend their cash. They don’t spend it because things will be cheaper in the future and as a result the economy seizes up.

So is cash better than alternative investments in deflation? Maybe is the answer. While we might see deflation in the ‘real’ economy, policy makes are doing their best to avoid it. They are doing that by printing lots of money. Although that average man isn’t seeing the money, the investment banks are. They then search for greater returns and may look towards alternative investments to find them.

Although there are two camps of thought on the inflation/deflation issue, the majority of people have the belief that it will be inflation. In a scenario like this alternative investments tend to do quite well.

Whatever happens we are surely going to see a bumpy ride in the stock market, I am pretty certain of that. The prices of alternative assets don’t move in correlation with the stock market. This means that you have a great way of hedging your risk that you may have in equities.

No one can be sure of what will occur in the future. You should try and allocate you assets in things that will preserve you wealth. You could have some alternative investments in your portfolio to do this.

I don’t know of anybody who hasn’t been affected by the financial turmoil we have seen over the last couple of years. I am sure that no matter how wealthy you are you would’ve noticed an effect. This has made people think more about their investments and start seeking out other alternative investments.

The main reason why many individuals are looking at alternative investments is because the returns have a low correlation againts other traditional assets. This means that when we have financial events like we have had recently, your entire wealth doesn’t take a hit. An extra bit of diversification will only help you in preserving your wealth.

Why is diversification good? If you had your money tied up in traditional asset such as property, stocks, bonds and cash then you are likely to have done poorly over the last few years. The stock market has performed poorly for even longer as it is lower than it was 10 years ago. Cash, although it gives you flexibility, is likely to lose real value at the moment.

I am not saying to blindly invest in alternative investments such as art, antiques or stamps etc. They have their negatives which I will mention. You just need to have them on your radar in case there is something that interests you.

What are some the negatives? There isn’t an active marketplace which means that it isn’t so easy to offload your investment when you want. It is different to the stock market as sometimes there might not be a buyer waiting. If you have to search for one then this adds to your costs.

A small market place with a lack of participants means that it is difficult to establish proper prices. There also isn’t a lot of historical data which means that you may have to put some work into establishing a price for yourself. This can be hugely subjective and prone to errors. If you do it well though there can be huge potential in alternative investments.

I don’t know of anybody who hasn’t been affected by the financial turmoil we have seen over the last couple of years. I am sure that no matter how wealthy you are you would’ve noticed an effect. This has made people think more about their investments and start seeking out other alternative investments.

The main reason why many individuals are looking at alternative investments is because the returns have a low correlation againts other traditional assets. This means that when we have financial events like we have had recently, your entire wealth doesn’t take a hit. An extra bit of diversification will only help you in preserving your wealth.

Why is diversification good? If you had your money tied up in traditional asset such as property, stocks, bonds and cash then you are likely to have done poorly over the last few years. The stock market has performed poorly for even longer as it is lower than it was 10 years ago. Cash, although it gives you flexibility, is likely to lose real value at the moment.

I am not saying to blindly invest in alternative investments such as art, antiques or stamps etc. They have their negatives which I will mention. You just need to have them on your radar in case there is something that interests you.

What are some the negatives? There isn’t an active marketplace which means that it isn’t so easy to offload your investment when you want. It is different to the stock market as sometimes there might not be a buyer waiting. If you have to search for one then this adds to your costs.

A small market place with a lack of participants means that it is difficult to establish proper prices. There also isn’t a lot of historical data which means that you may have to put some work into establishing a price for yourself. This can be hugely subjective and prone to errors. If you do it well though there can be huge potential in alternative investments.