Save some cash

A bundle of American dollars money is rolled up in a hand.
Nataliia Yankovets/Shutterstock

This might seem counterintuitive since inflation erodes the purchasing power of cash holdings. But even in this environment — where you don’t earn much from savings accounts — Rule still believes in having some cash on hand.

“A circumstance where you have a dramatic reckoning, something like 2008 or 1987, or 1990, liquidity squeezes, when they occur in the market, take down the price of everything temporarily,” he explained to Stansberry Research.

“Having cash gives you the tools and the courage to take advantage of that circumstance rather than being taken advantage of.”

In other words, cash acts as dry gunpowder, allowing investors to capitalize on opportunities if and when things take a dramatic turn south.

Good credit is important for your financial health, and Borrowell can help you take a turn for the better. Sign up for Borrowell to get your credit score and credit report for free!

Sign up

Buy a bit of gold and silver

Gold and silver nuggets on black background. Precious stones, luxury concept and mineral drainage. Industrial activity, treasure and fortune.
RHJPhtotoandilustration/Shutterstock

This is an obvious one. Given central banks' money printing, Rule pointed out the importance of owning gold and silver.

And the nice part? You don’t need to own too much of it.

“If you have a circumstance where the fiat goes to hell in a handbasket, the upside you get in your gold and silver means that a small insurance premium, which is to say a small holding in physical gold and silver, offsets a very large deterioration in the purchasing power of your fiat currency.”

“So absolutely save part of your wealth in gold and silver,” Rule stressed.

Don’t forget: There are also mining companies that are well-positioned for a precious metals boom.

For instance, Wheaton Precious Metals, Pan American Silver, and Coeur Mining tend to do well with rising silver prices. Meanwhile Barrick Gold, Newmont, and Freeport-McMoRan could deliver serious returns in a gold rally.

And these days, you can build your own safe-haven portfolio just by using your spare pennies.

Own some high-quality farmland

Young green corn growing on the field at sunset. Young Corn Plants. Corn grown in farmland, cornfield.
Mark Borbely/Shutterstock

Real estate is another classic hedge against rising inflation and interest rates.

But Rule stated that “the only sector” where he’s increasing his personal exposure to real estate is high-quality farmland — specifically in the Upper Midwest of the U.S.

“To the extent that I can buy very high-quality farmland in the U.S. Upper Midwest, I’m doing that very aggressively,” he said.

More and more investors have warmed up to the idea of farmland, and for a good reason: No matter what the economy does, people will still need to eat.

As an intrinsically valuable asset, farmland can be an ideal hedge because it has little correlation with the ups and downs of the stock market.

Between 1992 and 2020, U.S. farmland returned an average of 11 per cent per year. Over the same time frame, the S&P 500 returned only eight per cent.

These days, you don’t need huge cash savings to get in on commercial real estate.

New platforms allow you to invest in fractions of commercial and multi-residential properties, with as much or as little money as you want.

Get a $50 bonus when you open and fund your first Wealthsimple Invest account* (min. $500 initial deposit). Trade and Cash accounts are not eligible. Sign up now to take advantage of this special offer.

Get started

A ‘finer’ safe haven

Woman Visiting Art Gallery Lifestyle Concept
Beach Creatives/Shutterstock

If you like assets that are not subject to the ups and downs of the stock market — but can also act as a hedge against inflation — there’s one more to consider: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 174 per cent over the past 25 years, according to the Citi Global Art Market chart.

And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich, like Rule. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

You're 5 minutes away from the best mortgage

Searching for your perfect mortgage shouldn’t be hard.

Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.

If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.