Is it inflation or deflation that is coming? This is the question that people are asking at the moment. They weren’t asking this a couple of months ago. Nearly all the expert though that we would only see inflation. Whichever comes you need to be sure that you preserve your wealth and one way of doing that is through alternative investments.
I too don’t know for sure what will happen. If I had to bet I would say a period of deflation followed by inflation. Given that scenario what is a good investment? When there is deflation then it is wise to hold cash as it will increase in ‘value’. It will have greater purchasing power in the future.
As we may get deflation should we stay away from alternative investments? Well maybe not. The reason for that is the Fed is printing money like nobody’s business. Just because this isn’t having an impact on the ‘real’ economy it doesn’t mean that it doesn’t exist. This cash is then in search of investments looking for a decent return. It might just find its way into alternative investments.
If we don’t get deflation then having cash is risky. If there is inflation, it may increase quite quickly. In this situation you don’t want all your wealth tied up in cash. Alternative investments can be a way of hedging that.
Another reason for thinking about alternative investments like stamps and art is that they aren’t correlated to movements in stock markets. This means that if we get deflation and the stock market falls a lot then these assets are unlikely to match these falls.
No matter what people tell you, they can’t predict the future with any great certainty. I know it is difficult but you have to make you decisions based upon probabilities and don’t back what people tell you that are certainties. With that in mind you should consider alternative investments.
