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. Everyone was thinking that inflation was on the agenda. Whichever comes you need to be sure that you preserve your wealth and one way of doing that is through alternative investments.
I have to admit that I do not know 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? In a period of deflation then cash becomes a good investment because it increases in value. It will be worth more in the future than it is today.
So given that we might see deflation does that mean that alternative investments are unwise? Not necessarily.
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 money has to be channeled into something in search of a return. It might just find its way into alternative investments.
The problem with keeping hold of cash is that we might not see deflation. Inflation can take off very quickly and in a scenario like this, cash is one of the worst places you want to be. Alternative ways of investing 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. You have to do your best to filter out the noise and choose investments based upon probabilities. With that in mind you should consider alternative investments.
To find out more information about alternative investment visit my new blog… http://www.alternativeinvestmentsguide.com.