2. Use Gold and Silver as Inflation Hedges
You don’t have to do much digging to find evidence of inflation across the world, from food prices in Asia to gasoline prices in the U.S. As inflation seems to tighten its grip on the global economy, some think it will squeeze the life from the economy. Others think that while prices are rising and biting into growth, the recovery has enough momentum to keep plugging along at a modest pace. But you’d be hard-pressed to find any investor who thinks inflation is going away in the near future. Thus any investing strategy should acknowledge the importance of gold and silver as an inflation hedge. If you don’t feel comfortable storing gold bars or silver coins, there are always the hard-asset funds like SPDR Gold Trust (NYSE:GLD) and the iShares Silver Trust (NYSE:SLV) as alternatives.
3. Use Dividend Stocks as a Low-Risk Investment
Dividend stocks got a bad rap in the market meltdown of 2008, since many of these slow-moving blue chips were hit just as hard as the broader market — and in some cases, harder — and then added insult to injury by slashing their much-lauded dividends to meager levels. But dividend increases are on the resurgence, and so are dividend stocks. Consider this: If you put $10,000 in a dividend stock that yields 3% but sees shares flatline for a year, you still make $300 that year. What’s more, if dividends increase at 6% per year for 10 years, you will be making $500 or 5% profits at the end of the decade. Much better than a CD and on par with T-Notes, even if shares flatline. With the potential for share appreciation, investors should think long and hard about using dividend stocks as part of their portfolio — from sleepy utilities like Duke Energy (NYSE:DUK) to tobacco stocks like Altria (NYSE: MO) to telecoms like AT&T (NYSE:T). All of these stocks have dividend yields around or better than 5%.