With inflation running high, stock markets overpriced and investor sentiment uneasy – where do you invest your money now?
Gold, Art and Commodities is what I’m going to discuss in this post.
It compliments my previous blog post – Eggs & Diversification – where I touched upon some other mainstream asset classes you can invest in.
Commodities
I will put my hand up now and say that I actually know very little about commodities but I am bringing it to your attention anyway so you can go learn more about it if you want.
Commodities tends to be an umbrella term that encapsulates investable assets such as: oils, grains, lumbar, copper, other metals etc.
The reason why people like to invest in these and diversify their portfolio is because when there is a market correction, pandemic or anything that spooks investors and there is fear amongst the people – commodity prices tend to rise.
When there are supply shocks to oil or food shortages, again, prices of such things rise because people tend to panic buy (do you remember the 2020 loo-roll gate?) and stock up on supplies just in case the shops aren’t able to restock their shelves.
Like with any asset class, when one takes a dive in value, another one will rise so people like to have a certain % allocated to commodities to counteract other assets in their portfolio.
I am sorry that I cannot be more specific or helpful then this pathetic paragraph above but thanks to the internet, there is a plethora of information out there for you to go sink your teeth into!
Art
Now I am no billionaire, nor millionaire so how could I possibly suggest investing in art?
Truly rare and valuable pieces only sell for millions so how does one invest in such a dear category?
Well, I was listening to a podcast and on came the co-founder of this ingenious company called: “Masterworks”.
Their business model is aimed at retail investors, like you and I, who haven’t got a bountiful amount of cash to play around with, however, want to tap into an asset class that is fairly uncorrelated to other asset classes.
[As a side note, if you truly want a diversified portfolio to limit you downside risk if sh** hits the fan, then you want to invest in asset classes that are uncorrelated – meaning that if one goes down, that doesn’t necessarily mean to other one will as well because they’re not heavily interconnected]
Instead of having to buy a WHOLE piece of artwork, you can just buy a fragment or small % of one.
Even better still, they book a 15 minute consultation with you before you invest with them to a) make sure you’re the right candidate for them (always a good sign) and b) allow you to ask them any questions you have.
Be prepared to part with your money for between 3-7 years until you receive any return.
This may seem a long time to you but if you want to become an investor then that should be your minimum time horizon (unless you have a particular goal in mind) – so start thinking differently.
Hopefully over that time, the art piece you have invested in will have appreciated over that period and when they sell it – some of the profits come back to you.
Another thing I really liked about this company is that when I spoke with them they only allowed me to invest a maximum of 10% with them.
This is because they didn’t want to put any unnecessary risk to my capital and ensured that I only put in what I could afford to lose. Again, a very good signal from a company if you ask me.
So, if you’re interested check out their website below:
Gold
Last but by no means least: gold.
I will tackle this asset class in a future blog post because it deserves more than a few lines on it but this is just to wet your appetite.
In such uncertain economic times as these, when the printing press at the Central bank has gone ‘Brrrrrrr”, the stock market across the board is overvalued, the shortest recession (spookily so) in history just took place in March 2020 and the re-opening of things has been delayed by the delta variant…
It is safe to say that investors are uneasy.
A lot of people are holding an unusually high amount of cash in reserves (including Warren Buffett himself*) because people are unsure about where to place their money.
People are worried that there may be another crash and have less confidence in the stock market.
*FYI, if you do not know who this person is – google him. Now.
With inflation starting to creep up and eating away at capital sitting in the bank, some are turning towards the asset class that is the greatest hedge against inflation: gold.
Gold has been around for over 5,000 years and has withstood the test of time of being used as money because people know its intrinsic value.
Everyone on this whole entire planet – 7 billion of us mere mortals – understand that gold is precious, in finite supply and valuable.
That is why in uncertain times, periods of high inflation or during market crashes – people flock to the safe haven that is gold.
You can invest in paper gold or the true physical form of gold (the latter being preferable, imo) and add that as another category to your diversified portfolio.
TO DO
Research Warren Buffet.
Organise a 15 minute phone call with Masterworks (I don’t think there is a set minimum you can invest, which is a huge bonus).
Look up on Youtube: Mike Maloney – hidden secrets of money – episode 1.
You will be blown away so be sure to get some popcorn!!!
NEXT TIME
How to invest in gold.
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DISCLAIMER
This blog is for educational purposes only and should not be construed as financial advice. It is purely opinion-based.
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