The seven portions represented in Solomon’s Plan are as separate and distinct as possible, and are designed to move independently of each other. The goal of the Plan is to protect the downside of our clients by investing into distinct, non-traditional areas that offer opportunity for growth and hedge against major market corrections, such as those experienced in 2008 and early 2009.
Equities are a way to own stock in a business and, historically, offer the highest return on an investment. We invest in equities in two ways: a hand-picked group of 20 companies that we believe will perform better than the rest of the stock market, and a careful selection of ETF’s that invest in thousands of companies.
Depending on the current interest rate cycle, the cash portion may include CD's, T-bills, short-term commercial paper, or money market funds. The purpose of the cash portion is not just the expected yield. During market corrections or times of uncertainty, cash works to preserve your account value and that cash value can be deployed to under-performing portions to take advantage of lower prices.
There will always be demand for commodities and raw materials such as coal, oil, wheat and steel. During periods of rising inflation, commodities prices generally rise as well, which makes them a hedge against declining stocks and bonds. We use a basket of ETFs to invest in agricultural and industrial commodities, including corn, soybeans, wheat, coal, oil and natural gas.
The currency of a country is really an investment in the economy, government and stability of that country. Most US portfolios are tied to the value of the US dollar, but it is important to protect from potential declines in the US economy. We invest in the currencies of several countries in Europe, Latin America, Asia, and Australia as a safeguard against the US dollar.
Fixed income (or bonds) entails loaning money to a government or corporation. This investment typically earns interest and offers lower-risk than investing in stocks, and involves ETFs ranging from short-term treasuries to high-yield corporate bonds.
Precious metals have always been valuable and are a safe haven for investors in periods of uncertainty and misfortune. In recent years, values increased even more because demand, especially in technology, has far exceeded production. This portion is weighted mostly to gold and silver, but also includes platinum, palladium, and mining companies.
Real properties will increase in value over time and also generate income from rentals or leases. We incorporate real estate ETFs that own hundreds of properties all over the globe, ranging from high-rises in Tokyo to nursing homes in Indiana.
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