2020 SAFEGUARD YEAR END ASSESSMENT

Good News For 2021 (And Beyond)
While many investors respond to the current economic uncertainty during this pandemic with varying degrees of concern, the one thing leading investors agree on is this: Now is not the time to hoard cash.
 
We get it. 2020 has been a year of turmoil for American businesses and families. The economy has taken a hit. Restaurants are out of business. Small businesses are on life support. Job losses are topping 30 million. Household income has dried up. People are losing their homes. It’s almost like a bad dream that we can’t seem to wake up from.
 
So, with all of this in mind, how can we protect our wealth in 2021? Is there even much hope for growing wealth in the year ahead?
 
Silver Linings
Fear not. There is hope on the horizon. Most of it driven by a promising shift in monetary policies that are fueling economic transformation unlike any we’ve seen before.
 
Because of these shifts, investors need to understand the variables and move quickly to position themselves to take full advantage of the changes if they hope to end up on the plus side in the year to come.
 
How We Got Here
Back in 2008 the Federal Reserve and the United States Government funneled over $700 billion into Wall Street and Big Banks to avoid an economic crash. This unprecedented transfer of wealth came with a hefty price tag, of course. Smaller businesses weren’t spared the consequences of the enormous asset price inflation that followed.
 
The situation today has gone from bad to worse. As the Fed starts to print money to finance massive deficit spending, buy government debt, and keep the banks and Wall Street afloat, the reality is this: Fiscal restraint is out the window. We’ve moved from slightly less than $1 trillion in 2007’s balance sheet to more than $7 trillion in 2020.
 
Big Banking and most large corporations are doing just fine, by the way. Mostly due to those regular injections of free money which – unfortunately – the average person ends up footing the bill for, in the form of our taxes.
 
Bad News. Good News.
However, as our taxes have gone up, so has the value of assets. These include stocks, bonds and real estate all of which have seen substantial increases in value since last year, with no real end in sight.

As investors, we should remind ourselves that while all of this may have led to increased inflation, the way this activity has impacted assets is even more significant. Because as the value of stocks, bonds and real estate increase, the value of our money decreases.
 
From Lemons To Lemonade
Anyone who cares to look at the impact of the last 12 years will see plenty of proof that our inflationary policies have contributed to the rising cost of asset prices.
 
This is where the good news comes in. Because if we can take advantage of this outcome, our inflationary losses can become our investment gains.
 
The Aha Moment
Another way to look at this is to realize that holding cash in your savings account will never equal the wealth you could generate by investing that same amount of money into assets that are growing exponentially, even as cash values plummet.
 
Simply put, by far the safest and most efficient way to grow your portfolio – regardless of market conditions – is to leverage the effect of compound interest.
 
Working Smarter
For investors seeking a more secure way of responding to a potential economic crash, Safeguard recommends investing in assets that generate income and then reinvesting that income into further assets that also generate a healthy return.

First Deed Lending provides you with the high yield advantages of investing in rental property without the hassles of being a landlord. If you are interested in an opportunity to earn a stable income stream, even during volatile times, contact us today.