Common sense is not so common - Voltaire
I like to start by looking at a wide range of investments - this is my thought process:
Bonds – inflation makes me nervous – I could end up losing purchasing power
Cryptos – they're relatively new, so don’t have the kind of track record I’m looking for
Equities – if we get a downturn, then earnings are likely to be squeezed, targets missed
Property – higher interest rates make me nervous
Cash – I like to have some, but I’d be worried about inflation eroding its value.
Bonds – inflation makes me nervous – I could end up losing purchasing power
Cryptos – they're relatively new, so don’t have the kind of track record I’m looking for
Equities – if we get a downturn, then earnings are likely to be squeezed, targets missed
Property – higher interest rates make me nervous
Cash – I like to have some, but I’d be worried about inflation eroding its value.
But there's a real buzz about Commodities....so I want to give them a closer look. Here is The Goldman Sachs Commodity Index.
But there are many different types of commodities....I can't invest in all of them...so I dig a bit deeper....how is gold shaping up?
Looks interesting eh?
This is very simplistic analysis - but I want to demonstrate two things.
1) Firstly, I have a system that points me in the direction of what asset class I could be looking at
2) Secondly, having identified the asset class, I've got another system for deciding where to invest.
I cover both these systems in my book.
Commodities, such as gold have been around for thousands of years - they've got form. With sky high debt and income difficult to come by, I'm sure you'll agree, it makes sense to have some in your portfolio.
I don't think it's ridiculous to have at least 1% of your investments in commodities such as gold. I bet you've got NONE.