Investors will generally find themselves understandably concerned during periods of severe economic conditions. primary reason for this is because any significant changes in economic factors will alter the general investment landscape.
These changes can go on for years or even decades. Words like depression, recession and inflation usually come to mind, and while all three of these can be major triggers for economic change, there are plenty of other potential situations to take into consideration.
Currently, we find ourselves in a period of inflation but the opposite possible scenario is what’s known as deflation, and while it may not be as common as the others, it is nevertheless relevant to the economic landscape.
“It seems like deflation could be a good thing on the surface”, explains Richard Meyer Cayne of Meyer International at Bangkok, Thailand. “But once you scratch the surface, you’ll discover there are myriad consequences that can impact your portfolio to be avoided.
As a concept, deflation seems like a simple enough premise. When prices begin to rise during any given economic period, we experience what is known as inflation. When prices begin to drop we experience the exact opposite- deflation.
Falling prices should be good, no? While it may sound that way, this is not always necessarily the case. The question you need to ask yourself: Why are prices falling? In many instances it may be a result of lower demand.
Lower demand can ultimately equal lower production, reduced wages and higher rates of unemployment. There may other instances, deflation is the result of people choosing to spend less money.
The first reason for this is because people can get more as a result of lower prices, and secondly due to the fact that people want to save more cash when prices spike. Another factor that has to be considered is any outstanding debts you have to pay during a period of deflation.
The money you need to pay off a loan during deflation may be worth more than it was when you initially borrowed it and this can ultimately be compounded by the government’s response to higher interest rates, depending on what type of debt you’ve incurred.
Deflation doesn’t often make headlines until it’s well underway in the business world, so responding to it in a timely fashion can oftentimes be tricky. Focusing on sectors that cover overall staples (utilities, groceries, etc.) and fixed income investments can be one useful strategy.
Another good strategy is to consider investing in foreign markets. They may or may not be as affected as the economy in your home country or they may have cheap exported goods and services you can capitalize on.
These factors and more are precisely why it’s important to maintain a well-diversified portfolio.
You may not follow every dip and spike in the markets on the hour, but that doesn’t mean you shouldn’t review your investments with a trusted financial advisor on a regular basis. An economic and financial expert like Richard Cayne can help review your portfolio with you to ensure you’re making the right decisions should you find yourself faced with economic uncertainty.
Richard Meyer Cayne of Asia Wealth Group Holdings, the Meyer Group, Meyer Asset Management and Meyer International Ltd has been involved in wealth management planning for decades. Originally born in Montreal Quebec, Canada, he later relocated to Tokyo, Japan for over 15 years and now resides in Bangkok, Thailand.
While he runs the Meyer Group and serves as the high credibility CEO of Asia Wealth Group Holdings Ltd, a London, UK Stock Exchange-listed Financial Holdings Company, as well as the Managing Director of the Meyer Group of Companies www.meyerjapan.com. and has additionally been the managing director of multiple organizations that specialize in helping high net worth individuals with succession planning .
Having worked with clients all over the globe with everything from portfolios to bonds to mutual funds to offshore investing to investing in retirement for your golden years, Richard Cayne of Meyer International can help you invest the right way and protect your cash.
Richard has been a financial advisor involved in wealth management planning solutions and asset management in Asia for over 25 years and while living in Tokyo, Japan, he assisted many high net-worth Japanese families create innovative international tax and wealth management planning solutions. The financial holding public company of which he is CEO can be seen at Asia Wealth Group Holdings Ltd or the stock exchange link:https://www.aquis.eu/aquis- stock exchange/member?securityidaqse=AWLP Asia Wealth Group Holdings Ltd – Richard Cayne Thailand.
Meyer Asset Management Ltd has been in the wealth management space since March 2000 and uses fundamental analysis along with modern portfolio theory.
His image worldwide as a professional advisor has been sterling and he maintains a firm command and understanding of all things finance-related.