Financial Advice Blog

When a bust economy offers investors little more than a shaky market, it can seem like the easiest solution is to pull out all of your money and wait for conditions to improve.  However, savvy investors know that the time spent waiting for the economy to recover is time that could be put to use earning a profit despite the tumultuous economic climate.  If you’re tempted to stick your head – and your money – in the sand, then you cannot afford to skip these alternative investments, which will offer you a tidy profit while protecting your money.

Protecting the health of your investment portfolio involves diversification – and alternative investments can offer you just that, as they include a wide range of options from annuities to commodities and even real estate.  For example, an alternative investment that’s definitely worth your time and money is a certificate of deposit, or CD.  These handy financial assets protect the principal and return a fixed rate over the life of the CD; this means that you won’t lose your hard-earned money, yet you’ll still make a tidy profit.  If investing in CDs, be sure to lock in an interest rate now on an eighteen-month term to protect against the risk of rising inflation over the next few years.

Speaking of inflation, you’ll want to make sure that your alternative investments are protected against the threat of rising prices – and a treasury inflation-protected security (TIPS) will help you do just that.  TIPS offer a fixed rate of return over the life of the investment, yet take inflation into account; this means that you can make up for any losses that are incurred with vulnerable stocks and bonds.  Unlike with CDs, financial experts recommend purchasing longer-term TIPS to earn extra yield. 

For those who are more experienced in the world of investing, an indexed annuity might offer the perfect low-risk alternative investment for stock-heavy portfolios.  As one of the fastest growing investments to date, an indexed annuity is a contract with an insurance company that guarantees a minimum interest payment over the life of the contract.  As indexed annuities are tied to the stock market, you can even earn extra yield if the market does well, which should make for a very pleasing cash flow into your portfolio.  However, indexed annuities can be extremely complicated; make sure you understand the terms that you’re agreeing to before signing the dotted line of the contract.  An experienced investment advisor can help you choose the right indexed annuity to suit your investment goals. 

Investing doesn’t have to pose an all-or-nothing risk to your portfolio, especially if you’re keen on investing during the recession.  Any time spent out of the market is money down the drain, especially if you give up the opportunity to put your money in safe alternative investments.  Don’t let the shaky economy scare you off from the markets; instead, use it to your advantage with these safe and financially viable alternative investments.

Authored by Kenneth Himmler, Sr.

Filed under: Financial Advice