End of the line? It doesn’t have to be.

Since the breakdown of the world’s financial system in 2007, the Central Banks main game has adopted a recognisable pattern: hold the system together, don’t engage in meaningful reform, and prevent another Global Financial Crisis at all costs.

In other words, just keep kicking the can down the road each year, print more money and punish savers with unnaturally low interest rates across the globe.

Consequently, this has resulted in retirees and savers forced to take on riskier investments as they seek greater returns in an artificially created low interest rate environment.

As the questionable arsenal of the Central Banks continues to dwindle in both power and results, there are some key factors that investors should start to worry about:

  • Central Bank money solutions have produced declining growth for the last 4 years.
  • No matter what economic problem comes up, more debt and money printing is just not the solution anymore.

Consequences

Unfortunately for Australian investors, two major consequences have arisen:

  1. Superannuation investment risk.
  2. Over inflated residential property prices

You have probably heard quite a bit about the state of housing in Australia, so we’ll just point out that to avoid being majorly burnt in this sector, try staying away from certain investments (see below).

For most Australians, superannuation is the second largest asset after their homes and, regrettably, many super investors don’t realise where the real risks lie as the global financial system starts to runs out of track.

Wherever you look, be it Debt in China, Housing in Australia, or the break-up of the EU, 2017 is going to see the global convergence of a whole range of financial issues, so you do need to pay attention and take action if you’d like to:

  1. Avoid a major and permanent capital loss, and
  2. Take advantage of this circumstance to profit on the other side.

Solution

Underinvestment in precious metals despite its ability to do well in times of economic distress is as perplexing as it is unwise. Remember- Gold and Silver have stood the test of time for thousands of years. Recognising that it’s far from silly to have a small allocation to precious metals in your super portfolio is the first step to a more secure financial future.

Avoiding sectors tied to downswings (like Australian Banks and Retailers) and taking advantage of investments that will do well in times of economic uncertainty are strategies that may be easy to grasp but often quite difficult to implement.

If you’re feeling any concerns, we’d be pleased to offer some feedback on your financial position, and help shine a light on the global economy’s currently murky climate.