I'm sitting on a large cache of I-bonds and I feel like I should have more diversification and upside potential since I'm relatively young. However, none of the major asset classes appeals to me right now:
US equities:
- prices have still not returned to historically "sane" levels
- companies could be hurt by rising commodity prices (demand for raw materials in China, higher oil prices driven by political instability in the middle east)
- retiring baby boomers will start drawing down retirement assets, we'll see a net outflow of assets from the mutual funds, and the lack of demand could depress equity prices for a while
Bonds:
- yields are abysmal
- could drop in value if rates continue to rise (it would be hard for rates to get much lower)
International equities:
- many of the respectable markets are highly dependent on the US market, little true diversification
- many of the "less-respectable" markets are too risky (political and currency risk) for me to put a large percentage of my portfolio there
Real estate:
- can't buy individual property because my job requires mobility
- REIT funds could get hosed if interest rates rise, property values drop
Hedge funds/private equity:
- don't have enough assets to qualify
Individual stocks/options/currency exchange:
- don't have the time to muck around with these
So what does that leave me with? Index funds based on precious metals, inverse interest rate funds, and international funds focused on pacific rim economies? Someone please tell me I've overlooked something...
US equities:
- prices have still not returned to historically "sane" levels
- companies could be hurt by rising commodity prices (demand for raw materials in China, higher oil prices driven by political instability in the middle east)
- retiring baby boomers will start drawing down retirement assets, we'll see a net outflow of assets from the mutual funds, and the lack of demand could depress equity prices for a while
Bonds:
- yields are abysmal
- could drop in value if rates continue to rise (it would be hard for rates to get much lower)
International equities:
- many of the respectable markets are highly dependent on the US market, little true diversification
- many of the "less-respectable" markets are too risky (political and currency risk) for me to put a large percentage of my portfolio there
Real estate:
- can't buy individual property because my job requires mobility
- REIT funds could get hosed if interest rates rise, property values drop
Hedge funds/private equity:
- don't have enough assets to qualify
Individual stocks/options/currency exchange:
- don't have the time to muck around with these
So what does that leave me with? Index funds based on precious metals, inverse interest rate funds, and international funds focused on pacific rim economies? Someone please tell me I've overlooked something...