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Safe Haven Investments.

Learning and understanding safe haven investments can help diversify and hedge a portfolio during uncertain times.

 

A Safe Haven Investment by definition is essentially an investment that is expected to retain or increase in value during times of market turbulence.


Safe haven investments can be a great way to diversify any portfolio. By doing so it can create a hedge protecting other assets during times of high volatility and uncertainty in the market.




 

Precious Metals


Metals like gold, silver, platinum, and palladium have been seen as safe haven investments for a great period of time. Often these metals perform well during times of economic downturn, inflation rising/weakening of the US Dollar, political disagreements, and world peace uncertainty. These metals are seen by many as a trade or bartering currency, in the event the US Dollar were to collapse or a world war were to break out. Many investors/preppers believe that there is a possibility that the government can go back to the gold standard and start backing currency with gold and silver again. Which would make it an appealing investment. Furthermore, the metals are appealing to those who believe in a world war or fall out situation where the government will be hoarding materials and cash. Having these rare physical assets would give an upper hand in wealth.

 

Treasury Bills (T-Bills)


These are essentially short-term US Government backed debt obligations with a maturity of a year or less. When you buy T-Bills you are essentially loaning money to the US Government with the promise that when you cash in that T-Bill, they will pay you back the face value with interest at the time of maturity. Unlike precious metals however, these would not be very sought after in times of a US Dollar collapse of course. They are safe havens due to the security of being fully promised and backed by the government. For a short-term portfolio diversifier, these could be a sure thing. Especially during economic downturn and chaos.

 

Defensive Stocks


The stock market has stood the test of time to be very unpredictable (no matter how good of a analyst and speculator you may think you be). But some stocks have stood strong in the face of market bears and red candles. Those are known as defensive stocks. Stocks that tend to retain value and pay consistent dividends through market downturn. Such as utilities, healthcare, telecommunication, and consumer staples. No matter how the markets are performing, consumers till need to buy there groceries every week. You still need to pay your phone, electricity, and gas bills. Along with hospitals that won't shut there doors on patients due to turbulence in the market.

 

Cash


Many may not think of cash when they first hear the word safe haven. But, just think about it. You can has your cash sitting in form of stocks in an investment account. Now during a bear market your equity can decline as much as the market does. That is the risk with stocks. Now if that amount was in cash, held in your personal savings account or emergency fund account. Then that cash isn't going to lose any of its value in its relationship to the market. Not to say it can decrease in value or purchasing power in times of federal balance sheet expanding and inflation. However against the market your dollar amount will remain value and any interest your bank pays on top of that.

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