Investors are worried. On one had inflation theatens to reduce the value of the money holdings and on the other hand, they may lose money if they invest. Stocks can be volatile and has not plumbed to the depths of the past financial crisis of 2008 OF WHICH THE WORLD HAS NOT RESOLVED. Banks in US continues to pay obscene bonuses , Companies are robbed dry by their CEO and senior executives who speculate with companies's money to get huge bonus. Tom Cook who replace Steve Jobs at Apple is said to receive an annual compensation package in excess of US$300 million.
Banks sells investment products with layers of hidden fees and commissions. They are ruthless in their pursuit of profitability. So what to invest in? Bonds may decline in value once interest rates spikes up. The recent high interests paid by the Italian Government shows that interest can shoot to over 7%. Imagine you had a year ago bought Italian sovereign bonds with a coupon rate of 3.5%. The increase in coupon rate would cause your bond to drop in value substantially.
Properties in Singapore are now in suspended animation where the direction up or down is not clear. If we cannot invest in stocks, hedge funds, private equities , bonds or properties what can we invest in? We can invest in shares of companies with good long term prospects. This means we must be prepared to ride the down cycle and hold on to these assets. Think of yourself as not holding stocks but hard assets. Assets can be physical or intangible as in intellectual properties.
What does the world need in the longer term whether there is a financial crisis or not? The world population is increasing and the increasing middle class in China, India and Indonesia will eat more meat , fish and consume more milk. I would invest in companies that have links , the more direct the better, to food production. If I had the funds, I would start a private equity fund investing in companies that are into producing more food with less inputs. There are agricultural commodities funds but one needs to look beyond the name to see what they actually invest in. Many commodities funds don't invest in hard assets but in options which fluctuate with the prices. Avoid these.
Market Vector Agricultural ETF invests in large companies related to agribusiness. It has holdings in Potash Corporation, the world 's largest manfacturer of fertilisers, Mosanto which is well known for its genetically modified seeds and claims that it can increase yields dramatically, Deere & Company which makes large farm machines and Wilmar, one of the largest palm oil plantation companies in the world. Its expense ratio is 0.56% and if you hold for four years, your holding costs is less than 3% . In four years, the world will have recovered from the debt problems and with the increasing wealth of China and India, agribusiness would be the next big HIT.
Rather than buy gold we can invest in Market Vectors Gold Miners ETF. It has a low expense ratio of 0.53% and invests in gold mining companies such as Barrick Gold Corporation, Newmont Mining Corporation and Goldcorp Inc. As paper currencies devalue, gold mining companies will appreciate due to their assets in gold. Now that gold has dropped to US$1,640, off its high of US$1,800, this could be a good time to invest inn gold mining companies.
I am not promoting Market Vectors ETFs and don't even know how we can buy them since they are a US based company .I am just using them as an example of low expense ratio ETFs that invest in companies with solid long term assets such as agribusiness and gold. You can look for other similiar ETFs to invest in as I am sure they Market Vectors are not the only one with ETFs in oil , gold and agribusiness.
The final recommendation is Market Vectors Oil Service ETF. This ETF invests in companies that service the oil industry such as Halliburton, Schlumberger and Baker Hughes. If you think oil is getting scarce and if you believe that oil production has peaked and there is a need to look for new oil fields in areas that are hard to drill, oil service companies will be a good bet.
These three recomendations are not instant hits but safe bets that in two to three years time, may give you more than 10% annualised yield! These are "hard core" companies that will not go broke, or be over-leveraged because of speculative investments. They have good residual value regardless of the market outlook. The three sectors are in food ( we need to eat) and energy ( we need to keep our homes warm or cool and our cars running!). They are the basic necessities the world needs. Gold is a hedge to protect against rapid inflation or devaluation of paper currencies.
Banks sells investment products with layers of hidden fees and commissions. They are ruthless in their pursuit of profitability. So what to invest in? Bonds may decline in value once interest rates spikes up. The recent high interests paid by the Italian Government shows that interest can shoot to over 7%. Imagine you had a year ago bought Italian sovereign bonds with a coupon rate of 3.5%. The increase in coupon rate would cause your bond to drop in value substantially.
Properties in Singapore are now in suspended animation where the direction up or down is not clear. If we cannot invest in stocks, hedge funds, private equities , bonds or properties what can we invest in? We can invest in shares of companies with good long term prospects. This means we must be prepared to ride the down cycle and hold on to these assets. Think of yourself as not holding stocks but hard assets. Assets can be physical or intangible as in intellectual properties.
What does the world need in the longer term whether there is a financial crisis or not? The world population is increasing and the increasing middle class in China, India and Indonesia will eat more meat , fish and consume more milk. I would invest in companies that have links , the more direct the better, to food production. If I had the funds, I would start a private equity fund investing in companies that are into producing more food with less inputs. There are agricultural commodities funds but one needs to look beyond the name to see what they actually invest in. Many commodities funds don't invest in hard assets but in options which fluctuate with the prices. Avoid these.
Market Vector Agricultural ETF invests in large companies related to agribusiness. It has holdings in Potash Corporation, the world 's largest manfacturer of fertilisers, Mosanto which is well known for its genetically modified seeds and claims that it can increase yields dramatically, Deere & Company which makes large farm machines and Wilmar, one of the largest palm oil plantation companies in the world. Its expense ratio is 0.56% and if you hold for four years, your holding costs is less than 3% . In four years, the world will have recovered from the debt problems and with the increasing wealth of China and India, agribusiness would be the next big HIT.
Rather than buy gold we can invest in Market Vectors Gold Miners ETF. It has a low expense ratio of 0.53% and invests in gold mining companies such as Barrick Gold Corporation, Newmont Mining Corporation and Goldcorp Inc. As paper currencies devalue, gold mining companies will appreciate due to their assets in gold. Now that gold has dropped to US$1,640, off its high of US$1,800, this could be a good time to invest inn gold mining companies.
I am not promoting Market Vectors ETFs and don't even know how we can buy them since they are a US based company .I am just using them as an example of low expense ratio ETFs that invest in companies with solid long term assets such as agribusiness and gold. You can look for other similiar ETFs to invest in as I am sure they Market Vectors are not the only one with ETFs in oil , gold and agribusiness.
The final recommendation is Market Vectors Oil Service ETF. This ETF invests in companies that service the oil industry such as Halliburton, Schlumberger and Baker Hughes. If you think oil is getting scarce and if you believe that oil production has peaked and there is a need to look for new oil fields in areas that are hard to drill, oil service companies will be a good bet.
These three recomendations are not instant hits but safe bets that in two to three years time, may give you more than 10% annualised yield! These are "hard core" companies that will not go broke, or be over-leveraged because of speculative investments. They have good residual value regardless of the market outlook. The three sectors are in food ( we need to eat) and energy ( we need to keep our homes warm or cool and our cars running!). They are the basic necessities the world needs. Gold is a hedge to protect against rapid inflation or devaluation of paper currencies.
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