Whether we like it or not all of us are invested in the economy one way or another. It’s good to have an investment strategy you can fall back on whenever there is economic fear like inflation. What’s your investment strategy? What fears do you have?
Every few years, we have to deal with some investment fears. Right now, it’s the fear of inflation. This makes a person wonder whether they should change their investments around. Or perhaps take drastic financial measures.
I fear losing all of my money one day. Silly, but that’s what I fear. The only thing that’s helped me in this regard is to tell myself that even without a penny to my name, I’ll still be okay.
Another potential fear is that I’m invested in the wrong things, and inflation will wipe away my profits.
I am invested in many different assets, from real estate to stocks. These have been traditionally inflation-proof. But these are dropping in value quickly, which is a normal phenomenon as inflation fears settle in.
I may own something which isn’t worth earning any longer. If things have changed, then it’s worthwhile to sell certain assets.
For example, a piece of real estate that has gone up by a lot might be worth selling. Or, if my risk profile and financial situation are such that bonds are no longer needed, I could sell those off.
What should I buy with my newly sold assets?
Cryptocurrency is widespread, and though I don’t consider it an investment. It has the potential to go up in value, but I view it as a mode of currency. One that certainly has inflation protection built in.
Real estate or tools, or a business are always worthwhile investments. As physicians, we don’t consider websites suitable investments, but they are.
The investment fear, of course, is that the particular asset you want to buy has crashed. It’s so low that you don’t want to buy it. Perhaps that is the best time to invest in something when it’s on sale.
Right now, the fear is about inflation. Later it will be about digital currency or housing, or debt instruments. Living my life based on the fear de jour won’t be good for my cortisol levels.
Earning an income is the best way to inflation-proof yourself. If you used to make $150 per hour as an urgent care doctor, you would now earn $180. That’s inflation.
Suppose I can continue to earn an income for the work hours I put into something; I will be reimbursed at market rates. And the market, being efficient, will reimburse me based according to inflationary rates.
Revisiting Your Investment Strategy
I have a solid investment strategy because I started investing in 2008 – 14 years and going strong. I hope to make many more mistakes now at age 44 and learn from them.
My investment strategy is to invest in a diversified portfolio:
- private business
- public business
- real estate
What is your investment strategy? If you have one already, it’s good to go back to it whenever you feel investment fears creeping in. If you don’t have one, it’s a great time to develop a basic investing strategy.
Fear of Investing
Maybe this is a play on words, but you’re continually investing your money in the market whether you like it or not.
If you have a checking account, you are investing in cash, and your rate of return is whatever the current inflation or deflation numbers are.
If you have a roof over your head, you are paying rent, perhaps because you are shorting the housing market. If you have a mortgage, you believe in ownership as a return on investment.
I fear losing money like the next person. But 14 years of investing have proven my fears to be unsubstantiated.