Everyone wants to find the next winning investment. The goal of investing is to protect your capital first and generate a return second. Getting a good investment return can seem a lot like watching a dog chase its own tail. You want to find the next great investment but are not sure where to look. Well I have a few ideas to help you in building your portfolio.
Here are a few assets that are good bets to rise over the next 10 years:
Gold has been a great investment during the economic crisis. The precious metal has boomed over the past few years. Gold has been on a tear and is likely to continue its rise over the next few years. Noted investor Jim Rogers expects gold to rise to over $2,000 an ounce by the year 2020. There is no reason that gold prices cannot increase $700 or more over the next decade. Massive government spending and huge deficits will keep gold prices rallying for the foreseeable future. Don’t go overboard on gold however. It should represent no more than 5% of your portfolio.
2. Financial Stocks
Yesterday stock market dogs are tomorrow’s stock market darlings. Financial stocks have been one of the market’s worst performers over the past 2 years. Banks and investment banking stocks are still trading at levels that would have been unthinkable just a few years ago. You can buy a quality banking franchise for a fraction of their 2008 prices. It may take 5 years or more, but eventually there will be a comeback in the financial sector. Long term investors should position themselves now to take advantage of an industry comeback.
3. Foreign currencies
The Unites States dollar is still the king currency and has held up well during the economic recession. The dollar may be strong now but it’s only a matter of time until inflation rears its ugly head. Inflation is inevitable and it will have a direct effect on the value of the dollar. Currencies like the yuan will likely benefit from the dollar’s decline. Investors can take advantage of the coming inflationary boom by investing in foreign currencies. But that doesn’t mean any foreign currency is OK to invest in; while the yuan may boom; the euro may stumble.
4. Hard Assets
Gold is not alone in its meteoric rise in recent years. Copper, silver, and other hard metals are benefiting as well. Copper recently rose to $8,170 a ton. The rise in hard metals is just beginning. Demand for these products will only increase as world economies replenish their inventories. Copper will be needed to fund infrastructure and construction projects in many countries. Metals will not only be in demand for 2011, but for the next decade as well.
What assets do you think are in position to rise in value over the next decade or more? Why do you think this particular asset will be higher in 2020 than it is in 2010?
(Photo credit: Mykl Roventine)