In these uncertain times, which are the best investments for you? Historically, no one investment class or category has been on top time and time again. During 2014, for example, the following broad asset classes performed as follows:
|U.S. Large Cap
|U.S. Small Cap
Investment advisors at iShares (Blackrock) noted that the Federal Reserve (Fed)’s minutes from the summer of 2014 and Jackson Hole Symposium meetings suggest that a period of rate normalization is approaching. In other words, the Fed is likely to begin raising rates in the first quarter of 2015.
Per Russell Advisors, global markets once again will be dominated by the actions or inaction of central banks. They believe that there will be a difference developing in 2015. According to Russell, we are likely to see the major central banks head in different directions. The U.S. Federal Reserve and the Bank of England will likely take the first steps towards interest rate normalization while the European Central Bank and Bank of Japan will continue with artificially low interest rates.
Thus, these advisors and many others believe that interest rates will begin to increase. This will have a dramatic impact on the investment markets. Historically, rising interest rates can often translate into higher commodity prices.
Futhermore, there is a substantial and increasing segment of investors who lack faith in the U.S. Government and its economic & fiscal policies. This group believes in the imminent collapse of the U.S. fiat currency (the Dollar) and the global meltdown or re-alignment with respect to the U.S. Dollar. Will the U.S. renege on its debt to China and throw the entire global currency and trade market into shock? Frequently, investors think they can just ‘let their money ride” and rest on their laurels. However, prudent investors know that constant attention to the markets and investments is required to protect and optimize wealth. With these uncertain times, it seems to be necessary to be prudent.
Where to Invest Now
As the accompanying chart illustrates, no asset class or segment has remained on top very long. The appreciation or return on investment (“ROI”) varies quarter by quarter based on economic and other conditions. This is especially true in volatile and uncertain times. What are the top ranked economists and advisors predicting for 2105?
There are three investments that many analysts say have potential in 2015. These are foreign stocks or funds, real estate and precious metals. Here is the thinking behind each of these recommendations.
Many investment advisors are looking to foreign markets to provide the best returns in 2015. Specifically mentioned are Japan funds and emerging market funds. This is because these foreign markets are experiencing greater growth than the huge U.S. economy. According to the investment team at Blackrock, Most developed markets range from fully valued to expensive, even after the rough patch in September. While the Japanese market has recently seen a boost, stocks are still attractively priced, with a price-to-book ratio less than half that of the US. And there are reasons to believe that Japan will continue to provide attractive investment returns.
As noted above, interest rates continue to be held artificially low by the Federal Reserve Bank. By using leverage, you can acquire a significant position in real estate. 2015 is likely to be the year in which the interest rates begin to rise. It may be wise to lock in mortgage rates while they are still at or near the historically low point. It appears that the real estate market has finally solidified in most parts of the U.S. after the severe meltdown in 2007-2009. Being a “hard” or tangible asset, real estate tends to be a good hedge against inflation.
Another asset class that is likely to be affected by the rising interest rates is commodities. While one might think that rising interest rates (a tightening of the money supply) would be good for the dollar, the sad reality is that it may already be too late. The last time the Fed held interest rates this low for this long…well, it’s actually never happened. The last comparable time, however, gold, silver, oil, sugar, corn and many other commodities increased in price tenfold, or more. Conversely, bonds and dollar-backed investments suffered.
How Janguard Can Help
We at Janguard are here to provide you with unbiased information and advice with respect to your investment. For more information on IRA strategies and transferring your account to a self directed IRA or for answers to specific questions regarding profiting with your retirement accounts in 2015, call Janguard at 800.571.6341 today and discover how easy it is to secure your independence with a self-directed Janguard IRA.