The past year saw record-high levels of inflation, as well as its fair share of global tension. As is the case in inflationary environments, investors naturally ran towards what they thought would be good hedges against inflation.
Investors, particularly those who invest in stock markets around the world and other foreign investments, need to have a global investment strategy if they want their assets to maintain their purchasing power over time.
See how Swiss wealth management firms can help you diversify your portfolio
PROTECTING YOUR ASSETS DURING TIMES OF INFLATION
During times of high inflation, investors often look for ways to protect their assets. Inflation is a part of the economic cycle, and there will be times of higher inflation and times when it isn’t nearly as significant, although it will always be a factor to contend with.
The best way to deal with this is to be proactive and have a plan in place beforehand. In doing this, you won’t be scrambling to come up with a plan, all the while, you’re seeing the power of a dollar concurrently spiraling downward while you struggle to plan at the last minute.
Knowing this beforehand, you should structure your portfolio accordingly, in order to have built-in inflation protection, so you don’t need to panic when inflation begins to rise.
AMIDST GLOBAL INSTABILITY, INVESTORS WILL SEEK STABILITY
Whether it’s changing your asset allocations, and asset classes, turning to high-yield dividends, or investing in foreign currencies, global inventors typically seek shelter in the face of rising inflation.
HOW INTERNATIONAL DIVERSIFICATION CAN HELP PROTECT YOUR ASSETS
Global events that make the headlines can often have a substantial effect on markets for a short period of time, which can be alarming. However, over a long enough period, there will be some sort of resolution, the headlines, and the market corrects itself. To minimize any negative effects on your portfolio, it pays to incorporate holdings from a wide range of geographic areas and markets. Significant diversification is a sure way to protect your portfolio against any losses.
International diversification is when your portfolio is comprised of assets with exposure to different regions around the world, which mitigates potential risk from turmoil out of any one geographic area/region.
Financial portfolios with assets exposed to a wide variety of different countries can potentially recover substantially faster from volatility caused by geopolitical events. Though these events can affect certain sectors negatively, they could also have a positive effect, which would increase their chances of overcoming any losses, and casts a wider net for you to reap in potential capital gains.
Though it is impossible to predict what may happen next, being proactive and creating a robust portfolio of international diversification is a great way to help you overcome potential losses in the long run.
HOW SWISS-BASED INVESTING CAN PROVIDE A HEDGE AGAINST INFLATION
Investing broadly in international markets and currencies could be a great way to provide a hedge against inflation. When it comes to investing in foreign currencies, Swiss-based investing and wealth management in Switzerland have long been heralded as great hedges against inflation.
The Swiss franc has long been considered a safe investment by investors around the globe, as well as a good hedge against rising inflation. The higher standard of living in Switzerland (both their prices for goods and salaries for their citizens are higher than their European neighbors) allows the country to experience substantially lower levels of inflation compared to the rest of the world. This value is reflected in the renowned stability of the Swiss franc and is a prime reason why investors around the globe seek it out in times of global instability and volatile markets.
The robust Swiss currency pairs well with its stable economy, which effectively and efficiently avoids high levels of inflation, making it easy to understand why so many investors from around the globe consistently include Swiss-based investing in times of global volatility. Adding Swiss francs to your portfolio is one way to diversify your assets and provide a good hedge against rising levels of inflation.
Swiss-based investing can be a viable option if you are looking for ways to protect your hard-earned savings. Contact one of the professionals at LFA to see how Swiss wealth management can help to diversify your portfolio today.
