Showing posts tagged energy

Preparing For Inflation

We focus quite a bit in this country on the amount of money the government is printing to artificially stimulate and support our economy.

This is a potentially devastating practice, and one that will soon trigger rising inflation. Undoubtedly, Europe will also have to engage in the same kind of artificial money creation to prop up its sluggish economy.

Investors should be forewarned that rising inflation will affect their cost of living and erode the value of their portfolios. With so much excess money sloshing around, I believe we will see dramatic inflationary and cost-of-living spikes in 2012.

To counter this, savvy investors should own stocks, not bonds. Bonds will be particularly vulnerable in a rising interest rate environment. I would suggest that investors focus on commodity and energy-related stocks. Two of my favorites in these categories are Market Vectors Agribusiness and iShares Dow Jones U.S. Energy.

Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry for over 22 years. Check out Ed’s discussion topics for a quick tip or two for your own financial well-being in his Media Center or follow Ed Butowsky on Facebook.

Tap Brakes On Money Markets

It is always a challenge for financial advisers to tell clients how to invest their money. As economic conditions change, so too must our recommendations.

I am extremely concerned about how much money investors are putting into money markets. This dooms their portfolios to a return of less than 1 percent and guarantees them a loss of purchasing power of about 6 percent per year.

Investors need to understand the risk of losing their capital and also the risk of losing purchasing power. Those who invested in money markets since 1970 have lost an average of 4.5 percent of their purchasing power per year after taxes.

This is why it is important to consult a financial adviser to make sure you are building a portfolio that both grows and maintains its purchasing power. Capital preservation is a given, but due to the rising costs of living you can maintain your capital but erode your standard of living.

Some of the investments I recommend involve utilities, such as the Utilities Select Sector SPDR (symbol: XLU); master limited partnerships such as Energy Transfer Equity LP (ETE); and real estate investment trusts BRE Properties Inc. (BRE) or Apartment Investment & Management Co. (AIV).

These pay a nice income and have the potential for capital appreciation.

Ed Butowsky is the managing partner of Chapwood Investment Management and is an internationally recognized expert in the investment wealth management industry. Ed is also a frequent guest on other networks such as CNN, NBC, ABC, Fox News, Fox Business, and Bloomberg to name a few.
 
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