Where to put Family Investments; Economist Gary Shilling Tells You
Your family investments are some of the most important monetary assets you have. These investments go towards your children’s education, your retirement and that 1950’s sports car you’ve wanted since you were 16. With the economy barely on a bounce back from 2009, it’s still confusing on what family investment ideas will prosper. Gary Shilling went on TechTicker in early February and told Henry Blodget how to make the most out of family investments.
Shilling made a prediction in the summer of 2009 stocks would have a 30% downfall, which has not happened yet. A lot of his current predictions go against what is the mainstream way of thought for the economy in 2010, but his views should be taken seriously.
Shilling brought to light the fact that consumers account for 70% of spending in the U.S. economy. Because of tight family budgets and lower family incomes, those consumers are pulling back their spending and deciding to save instead. As a result, Shilling says the economy will only have a 2% growth and people should put their family investments in long term savings.
Shilling favors the buying of long treasury bonds as opposed to stocks. Many other economists say this idea might back fire, because if inflation occurs (as many of them are saying it will, in coordination with a comeback in the economy) these bonds won’t make money.
However, Shilling does not believe the inflation will happen. Due to the excess capacity the world is dealing with, too much labor will happen which will lead to deflation. He says family investment should go into treasury bonds, which, with an increase yield to 3%, would make bondholders 25%; 50% if you buy zero-coupon bonds.
Shilling also says to buy the dollar! With all the troubles in Europe and Greece, the Euro will decrease in value, and the dollar will increase. Another tip for family investments is to get rid of commodities.
In a nut shell, Economist Gary Shilling says you should do the following with your family investments:
- Buy long term treasury bonds, not stocks
- Invest in the dollar, not Euro
- Get rid of commodities
- Do exactly the opposite of what everyone was saying to do at the end of last year.
Remember, this is only one economist’s perspective. For the entire interview on TechTime, go to the Business Insider page on what’s hot.
