How To Protect Your Investment Portfolio Against Inflation

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Dr. Thomas Schröck: the Founder and CEO of The Natural Gem: leading expert in naturally coloured and untreated gemstones as an investment.

The Economy, Inflation and Uncertainty

The U.S. inflation rate has reached its highest point in 40 years, at 7.5%. This has investors scrambling for various investment options to secure their wealth. Not only does inflation chip away at real savings, but also it may put the return of your investment portfolio at risk if it is not properly balanced with high enough returns and is being safely distributed. How can investors mitigate the negative developments of the fluctuating financial markets? That is where alternative investments come into play.

The inflation rate is dynamic and changes depending on the current events. Currently, we can predict that inflation will continue to increase based on the outcomes of geopolitical affairs, the continuous increase of money supply in the EU and the adjustment to a post-Covid world, which all indicate an unprecedented level of uncertainty.

For you to make the most out of asset classes that can protect your investment against inflation, we first need to look into what kind of options make sense for you. Popular tangible investments are gold, art, wine, classic cars and gemstones. Here are some points that can help you make a decision on which kind of tangible investment would be suitable for you.

Which alternative investment is right for you?

If you are looking for a tangible investment product that has a real-time valuation, you may be leaning toward gold. With its adjoining gold standard, it is easy to find out the valuation day to day.

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If you are looking for long-term investment options, art, wine, classic cars and gemstones may all be suitable options. It is important to determine what level of care and capacity you have to mind for your investment product. Do you have the right conditions for storage? Do you have the expertise in terms of maintenance? How secure is your storage facility?

As an expert in the field of gemstone trading, and the owner of all the above-stated investment products, I see the benefits of considering each of these options.

For example, with gemstones, each gemstone is unique. Since each gemstone is unique, it’s important to find one that suits you. It is comparable to art to some extent, but the difference is that naturally colored gemstones occur, as the name suggests, naturally. If we compare gold and gemstones, we can see there are distinct differences. One of the main differences is value concentration.

• 1 kg of gold will be approximately $54,000.

• 1 kg of fine rubies will be approximately $172 million.

Gemstones are the physical asset with the highest value concentration in the world. The valuation process also has to be noted. Unlike gold, the value of gemstones is determined by multiple factors which are identified by gemological laboratories—namely the 4C’s (carat, color, clarity and cut). Make sure you research any gemstones you invest in to ensure they have their features certified, as these quality measures will determine the valuation of the gemstone.

Conclusion

The biggest worry for many today is the potential of a market crash. With rising inflation rates, global political tensions and cuts in trade agreements, it’s unsurprising that many are worried about the effects on financial markets.

The thought of the global economy crippling the buying power of local economies is worrisome for business owners and individuals alike. This is why businesses and individuals should investigate investment options that have less correlation to the global economy and have historically been used in times of uncertainty.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.


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