Читать книгу Mutual Funds For Dummies - Eric Tyson - Страница 23

Whenever bad things happen, especially inflation, credit crises, and international conflicts, some investors seek out gold, silver, and other precious metals. Over the short term, these commodities may produce hefty returns, but their long-term record is more problematic. Over the very long-term, gold has kept investors just up with the rate of inflation — eking out an annualized return that is 0.5 percent per year above the rate of inflation. See Chapter 14 for all the details and how you can diversify your portfolio by using specialty funds investing in this sector.

With the proliferation of cryptocurrencies, I must briefly discuss investing in currencies. There are very few funds that invest in currencies, and they all have pretty dismal or, at best, mediocre long-term track records. This makes sense because currencies — which are essentially keeping your money in cash — are poor investments. Over the long term, for example, the purchasing power of holding the U.S. dollar declines at a rate of about 1.5 percent per year.

Will cryptocurrencies be any different? By financial market standards, their track record is quite short. Believers point to the crazy price increases enjoyed by select cryptocurrencies (such as Bitcoin and Ethereum) in the marketplace of now more than 17,500 cryptocurrencies, and more are coming quickly.

The explosion of cryptocurrencies is in itself revealing. Crypto creators come up with an idea for how to promote a new crypto, and by getting in on the ground floor, they hope to reap large profits if others buy in and hopefully drive up the price.