Stocks are an excellent long term investment that’s protected against inflation. Historically stocks have out performed both bonds and gold, to yield an average return over the last 20 years of 10%. A single dollar invested into stocks in 1801 with dividends reinvested would be worth over $12.7 million today – that shows you the power of compound growth. A dollar invested into gold on the other hand would be worth $32.84 today. If a dollar was invested on the bonds, it would be $18235. Focusing on planning the investments on next 40 years can be done instead of for 200 years as living that long is impossible. One need not have to put money into the gold basket as stocks have grown so well than the gold even during inflationary times.
Money must not be poured in a single stock or even a single nation’s stocks by the investors. Either in a single stock or even a single nation’s stocks, one must not pour the money. Diversification is still king and investors should put some of their funds into foreign stocks. This takes place mainly in growing countries like China, Turkey, Russia, Brazil and India. These countries have begun liberalizing their laws to allow foreign investors, and they growing much faster than the developed countries in the West. Obviously there’s a risk involved in investing in foreign stocks, but the potential returns are incredible. ETFs like iShares MSCI Turkey Invest Mkt Index (TUR) and iShares MSCI Singapore Index (EWS) can be used by the investors to trade with foreign stocks. Biggest indexes in Turkey and Singapore are tracked by these ETFs. In Turkey and Singapore, biggest indexes are tracked by these ETFs. Through online brokers that allow customers to trade foreign stocks, stocks in these countries can be chosen. Charles Schawb and Etrade are the online brokers who allow foreign stock investing. If you want to trade with foreign stocks, you need to choose a broker before signing up who can meet your needs. In order to find the best one among various brokers, comparisons can be made. If there’s ever inflation in the United States, investments in foreign stocks that use their own currencies, won’t be affected.
Money can be invested on certain commodities by using ETFs like United States Oil (USO) and SPDR Gold Shares (GLD). These ETFs allow normal investors to easily get into commodities without ever having to trade futures contracts or other complex financial derivatives. Investors can purchase shares in them the same way they can in ordinary stocks as ETFs are traded on the stock exchanges like regular stocks. ETF commodities are available in dozens ranging from platinum to natural gas in the market. With new ETFs being launched regularly, ETFs are available for almost every major commodity. A well diversified portfolio of stocks should include domestic stocks, foreign stocks and commodity ETFs, as these are all protected against inflation. During inflationary environment, it is unsafe to have cash in bank as the purchasing power of each dollar will diminish.
Author is an expert writer on Compare Online Brokers and Options Trading.
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