We are still in the midst of a financial crisis. Greater than 1% swings in the stock market is not the sign of a healthy market. Many experts are now undecided whether we will see inflation or deflation. With this in mind you need to be sure that you try and protect your wealth and you can do that by using alternative investments.
I too, like everyone else, am uncertain. If I had to make call on it I would say that first we will get deflation follow by an extended period of inflation. What does this mean for investing? Cash is king in times of deflation. This is something that Japan has seen and is still fighting inflation to this day.
If deflation is on the cards then should you stay away from alternative investments? This in not necessarily the case. Just because we might see deflation in the wider economy, we might also see inflation in other assets. The Fed is printing forests’ worth of money. You may not be seeing that yourself but it is in the financial markets. This money will want to find a home that offer a decent return and they could be alternative investments.
Although they might not give you the greatest returns during deflation, alternative investments are a lot safer than many other assets. They do extremely well in inflationary periods. It is a great way of diversifying your risk for the future.
Values in alternative investments, such as wine and antiques, aren’t very correlated to fluctuations in the stock market. This allows you to diversify more and given that a lot of people have a lot of wealth tied up in equities this is not necessarily a bad thing.
Not being able to know what will happen can be quite unsettling. This means that you have to do your best to protect yourself if the worst does happen. By having some alternative investments in your portfolio you will be in a better position.
