https://www.visualcapitalist.com/chart-assets-make-wealth/
Ray Dalio suggests considering several factors when identifying a good store of wealth, especially in times of inflation. These factors include:
1. **Inflation-Hedge Assets**:
Dalio emphasizes the importance of investing in assets that traditionally perform well during periods of high inflation, such as TIPS (Treasury Inflation-Protected Securities) and other inflation-hedged bonds.
2. **Practical Investments**:
He suggests investing in practical and essential items that you will need in the future ie buy now before prices go up.
Like housing (your residence), education (paying forward your kids' education), and essentials like food and healthcare, where you can.
Investments are likely to retain their value if they fulfill fundamental needs.
3. **Geographic Considerations**:
Dalio advises considering stable countries that are economically balanced (where earnings exceed spending, balance sheets free of too much debt), socially cohesive (ie free from internal conflict) and countries without major international conflicts.
4. **Innovative and Technological Advancements**:
Investments in cutting-edge technologies and sectors driving an intellectual revolution may offer good returns as these areas can be expected to grow and adapt over time.
5. **Diversification**:
A critical strategy Dalio highlights is diversification, which reduces risks - as much as 80% - without necessarily compromising returns. He stresses the importance of not putting all financial resources into one type of investment or market.
6. **Understanding the Financial System and Currency Value**:
In the context of depreciating currency values globally, Dalio notes the relative strength or weakness of currencies should not be the sole factor in determining a good store of wealth, as most currencies are losing buying power.
Instead, the focus should be on assets that can safeguard against inflation and maintain purchasing power over time.
Dalio’s perspective is that in selecting a store of wealth, one should consider assets that not only preserve value in challenging economic times but also provide essential benefits, are diversified, and adapt to technological progress and global economic shifts.
LINKS
Ray Dalio - The great reset has begun
https://youtu.be/5LI6thghhRI?si=kXZkfT24KyTTVCkR
where the super rich store their money
https://www.dontwasteyourmoney.com/super-rich-store-money/
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