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Where Do All The Smart Families Invest Their Money?

Recently, the Federal Reserve hiked interest rates by a half of one percent. For many families who want to save, the move was seen as hopeful. But it is unlikely that rates will continue to rise because of the poor state of the wider economy. State and federal governments are still under a mountain of debt. And most people are still trying to pay down debt they built up before the financial crisis.

 

This is a big problem for families. Families need savings in order to be able to put a deposit down on larger home or put money towards college. And yet, just putting your money in the bank is a surefire way to have it frittered away. Interest rates are just too low to make it worthwhile.

All this has meant that many families are looking for alternative ways to grow their money. Given that traditional savings routes aren’t performing, what should smart families do?

They’re Buying Into QE

After the financial crisis, the Federal Reserve began doing what it called, QE. QE was basically a bunch of big payments that the Fed made to commercial banks to keep them in business. But it had an unusual and largely unexpected effect: it boosted stock prices. People who bought stocks just after the depths of the recession made a killing. Why? Since the crisis, the value of shares almost tripled. That’s a 300 percent return for those who stuck with stocks for the long haul.

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But that’s all in the past. What about today? Well, it turns out that other places around the world are now trying QE for themselves to boost stock prices. Japan is one such country, the EU another. There’s every reason to believe what happened in the US will occur in these places too. So, rather than try to avoid QE, it may be just the right time to buy into it.

They’re Buying Metals

Precious metals have long been seen as a hedge against economic turbulence. They’re great when inflation rates are high because they’re not affected by the falling value of currency. And they’re great when interest rates are low because families need a place to store their wealth.

Gold_bullion_2en.wikipedia.org

Since 1998 many smart families decided to buy precious metals. And many families made a great return. Up until the financial crisis, gold outperformed the stock market. And recently, it’s been making up lost ground. If you believe that we’re headed for another major economic crisis, then gold is a no-brainer. As the economy starts to tank, the government will probably begin printing more money. And if it does, then the market for gold will be extremely bullish indeed.

They’re Buying Tech Stocks

Tokyo_Stock_Exchangeen.wikipedia.org

Almost all of the significant disruptions we’ve seen in the economy over the last thirty years have come from the tech sector. Computers, the internet, and social media have changed how we work and play in fundamental ways. But the tech sector isn’t finished yet. In fact, many believe that the biggest changes are yet to come. If that’s true, then it’s excellent news for investors. Tech stocks are likely to rise considerably as companies bring new products and earn higher profits. S&P Capital IQ expects a 21 percent increase this year alone.

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