This week was another very significant week of business and financial news. The Federal Reserve announced they would print up to $1.2 trillion dollars into buying up treasury bills and mortgage-backed securities. More money printing means more worries about mass inflation. The dollar took a sharp hit the next day valued against the Euro and British pound. Many of you are worried about your retirement accounts and investment portfolios with good reasons. You don’t need to act like the country is crumbling, but you should start thinking about your investment choices based on your age and risk tolerance.
How old are you?
This matters. If you are in your 20’s, 30’s, or early 40’s, consider continuing to invest in stock market securities. You have plenty of time to see the market rebound again and make you very wealthy when you have securities at a deeply discounted price. If you are in your 50’s or 60’s, you should definitely be looking to shift your investments to something more secure and safe like a bank CD or bond funds.
What is your risk tolerance level?
Do you like to roll the dice or do you cry every time you lose a dollar in the market? If you don’t mind taking a big risk, start investing in all of the market sectors that tanked last year and the beginning of this year such as financials, energy, and real estate. If you have no risk tolerance level, then consider a mix of bond, dividend, and balanced ETF and mutual funds. You may also want to own a little bit of gold and oil to hedge your account from inflation.
Gold and Commodities will protect your portfolio from inflation
When the dollar weakens from inflation, the demand for gold goes up. Also, commodities such as oil and natural gas tend to move inversely from the strength of the dollar. Personally I don’t think that gold and commodities are a good long-term investment. But, if you’d like to hold them for six months to a year to protect from inflation, that might be a good idea.
You don’t even need to own futures notes or actual gold to invest in gold and commodities. If you want an easy way to invest in these assets, look at the ETFs such as USO, DIG, XLE, IGE, and GLD. GLD buys and holds the gold for you and companies related to it, so you don’t have to deal with all of those gold coins.
If the government keeps giving out money from thin air, there is no question that the dollar will weaken. Consult your personal financial advisor or planner for more information about protecting your portfolio.