dr. Thomas Schröck: the founder and CEO of The natural gem – leading expert in naturally colored and untreated gemstones as an investment.
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Everyone is concerned about inflation these days, and rightly so. UK inflation has struck a new highlight in 40 years of 9.1%, which, depending on the asset allocation, can drastically reduce the value of your investment portfolio. To prevent the value of your portfolio from falling, it is important to diversify your investments and implement financial assets that will act as a hedge against market inflation to safeguard your money during periods of financial disruption.
Fortunately, in my experience, there are a number of alternative investments that can help mitigate the effects of inflation and even safeguard wealth.
Property
There are several types of real estate investors who may want to consider inflation hedging, including single, multi-family, and commercial. Commercial real estate includes the purchase of real estate such as office buildings, residential complexes, warehouses and shops. However, making an investment in commercial real estate often requires a lot of money. For individuals looking to invest without making a significant initial commitment, real estate funds are a viable option.
The average house price in the UK was $338,000 in April 2022; this is $37,000 higher than in April. And according to a report from EY ITEM Club, UK house prices are expected to rise 8% over 2022. So if you were worried you might have missed the boat, I think there are still opportunities to make a profitable real estate investment this year.
Fine Arts
Due to its high maintenance, storage and space requirements, fine art is not the most popular investment decision for most people. But even in times of inflation, the value of excellent art increases with time.
In fact, throughout history, art has always beat inflation. It is considered an investment of passion that can be passed down from generation to generation, while also working as a beautiful addition to your home. Paintings, drawings and prints are the most popular options, but even sculptures are a good investment.
Your best chance at a respectable payout is when you buy through an art auction house, but keep in mind that they typically charge about 5% to 25% of the sale price.
Classic cars
Many car enthusiasts find the prospect of making money by buying and reselling cars appealing. While most cars drop in value quickly after being driven off the dealership, classic cars appreciate over time because of their rarity, performance, or unique features.
Historic Automobile Group International’s most comprehensive index is the HAGI Top Index follows vintage collectors cars from Porsche, Ferrari, Bugatti, Alfa Romeo and other brands.” And while the pandemic was impacted by the pandemic, the top index rose 6.19% in 2020 and 2.73% in 2021 year after year. This shows that even during financial turmoil, classic cars can still perform well and work as a viable option to diversify your investment portfolio.
However, it is important to note that investing in classic cars requires significant knowledge and skill to execute profitable trades. Classic cars also need the right storage conditions to prevent damage to the car and can need some expensive TLC from time to time.
Gemstones
Full disclosure, I work in gemstone investments, but I believe they are one of the investment world’s best kept secrets. Prices for these gemstones have risen dramatically over the past 10 years.
Rubies, sapphires and emeralds are some of the best gems in terms of value and future growth potential; their values have an estimated valuation of between 5% to 10% a year since 1995.
Compare them to gold, one of the better-known alternative investment options. Although the price of rubies fluctuates depending on their quality and color, if one were able to collect 1 kilogram of highly prized rubies they could be appreciated in the millionsmaking rubies thousands of times more valuable than 1 kilogram of gold, which is currently worth it about $60,000.
As with fine arts, gemstones have been used throughout history as a means of securing wealth and passing it on to families. However, you don’t have to worry about special conditions in which the gemstone is stored, as it does not deteriorate over time.
Overview
There are several options available to high net worth investors that can be used to prevent the value of their portfolio from falling by hedging against inflation. Whether you are investing in modest amounts of bitcoin or private equity worth millions of dollars, it is essential to take the necessary precautions to protect yourself from stock market declines during periods of inflation. And looking at the current state of the economy, there is no better time to diversify your investments than now.
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice on your specific situation.
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