Wednesday, December 14, 2011

What is investment strategy can do in 2012 ?

The main purpose of investment is to maintain and possibly increase a person's level of wealth.

In addition to avoiding loss of capital preservation, the main consideration is to beat inflation investing. Because inflation eroded the purchasing power that effectively reduces prosperity. Based on these two considerations, both gold and stocks proven to beat inflation.

The price of gold is very volatile at this time. The rise in gold prices expected as a result of central bank actions of developing countries to diversify their foreign exchange reserves by reducing the dollar. With the gold price volatility is high enough, the prospect of the gold price will very depending on whether there is excess liquidity or not.

with current conditions, it is likely the Fed will be more careful poured liquidity due to already high growth of money supply. Meanwhile, liquidity needs for re-financing the debt would create an international interest rates move up.

With these considerations in mind, gold has more competitors. However, based on consideration of capital preservation and inflation protection, the issue is not gold OR stocks but gold AND stocks. Diversification is necessary for the moment, besides of course prudence in investing.

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Investment strategy is very important not only in year 2012 but also in next year and so on.

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