Investing hard-earned money in some of the assets over a period of time could extract wealth through it in the name of returns. But the outcome differs depending upon the asset you choose. Extrapolate people can predict what could be future growth but are not accurate for sure. Generally, most people tend to look for real estate or fixed deposits for safe and continuous returns. Because these assets are low risky and less volatile. But things can change according to the market conditions where we have seen how china’s real estate has collapsed.
Why Recession fear is circulating
In their report, Goldman Sacs said, “There is a 30% probability that the US may gonna face a recession in the next year”. It may face or may not but the fear is circulating in the markets making it too volatile. Also, the United States has recorded its 40-year highest inflation at 9.1%. The DOW and NASDAQ have already bottomed out at about 20%. So, with this uncertainty, it is very clear that the upcoming day is full of perplexing days. Fed already raised about 90 basis points last week to tackle inflation.
Performance of stocks and real estate
While the most desirable asset by investors, real estate is also showing negative growth because of many factors. Generally, real estate is an illiquid asset that requires a large chunk of money to invest. But due to the increase in interest rate hikes and mortgages, people are now turning their heads to another one. The sales are now reducing drastically month by month. Same as the stock market is not performing as per the expectations.
Is crypto currency a better hedge
Crypto seems to be self-dependent from the geo economical factors. Normally entire crypto will be running on the investor’s emotions and availability. It is neither dependent on the results nor external economic factors. This blockchain-enabled currency has the highest optimism from investors because it is safe and secure, and does need not to pay every single service charge unlike in stocks. Bitcoin has only 21 million coins to trade for. So, the demand and supply must drive within that limit. Having said that crypto has also seen a major fall in recent months.
But collectively every asset has its own returns and rewards. One may perform well but the other may fall. All together returns matter at the end of the day. Hedging position in different assets in this volatile condition performs well than dumping everything in one.