If “pandemic” was the trending news topic of 2020… “inflation” likely replaced it in 2021.
According to a poll by the Associated Press-NORC Center for Public Affairs Research, nearly 66% of Americans say their household costs have risen since the pandemic… compared with only about a quarter who say their incomes have increased.
And all three major U.S. indexes dropped Tuesday after a report from the Department of Labor showed wholesale prices soared by a record 9.6% in November from a year earlier.
It’s the fastest annual pace on record for the indicator. So, what’s behind the rising prices?
Since the pandemic outbreak in 2019, the U.S. government has spent trillions of dollars to revive the economy. Coupled with supply chain issues and rising demand, it’s no surprise that prices are rising.
Look, you never know what life will throw at you. And 2021 was a perfect example of that mantra.
Inflation fears could drop the market 20% or more and give you a rare shot to buy dirt-cheap stocks…
You could lose your job. Or you could quit your job, as millions of Americans did during the Great Resignation of 2021…
Or a huge medical bill or lawsuit might blindside you.
That’s why you always need cash.
You see, cash is the universal asset class because everyone needs it. At Palm Beach Research Group, we like cash because it provides optionality.
So how much cash should you have ready to cover life’s unpredictable events in 2021?
How Much Cash Should You Hold?
At PBRG, we use a highly diversified portfolio. It includes conservative investments… speculative plays… portfolio hedges… and true alternative assets.
And it’s worked spectacularly…
Palm Beach Letter editor Teeka Tiwari’s model portfolio is once again crushing the stock market – producing a tracked return of 57.9% through November 15.
Since he took over this newsletter back in June 2016, his recommendations have produced an average return of 552%.
That’s 59 times better than the S&P 500’s average annual return. In other words, that’s 59 years of S&P 500 returns in less than six years.
What’s our secret sauce? Asset allocation.
Asset allocation is simply a way to diversify your portfolio across different assets to maximize returns and minimize risk.
Our PBL asset classes now include cryptos, collectibles, and private markets, as well as old standbys like gold, real estate, stocks, and bonds – and of course, cash.
(Palm Beach Letter subscribers can read our 2021 asset allocation guide right here.)
Despite rising inflation, cash is still an asset we want to hold. So we recommend you keep up to 10% of your portfolio in cash.
That includes checking and savings accounts, money markets, CDs, and certain cash-like ETFs and mutual funds.
While it’s important to have cash on hand for emergencies and when opportunities strike, holding too much cash could actually cause you to lose money.
That’s because inflation erodes your buying power…
For example, if you put $100,000 into Teeka’s recommendations since he took over the Palm Beach Letter in 2016… it would be worth $651,000 today.
Meanwhile, inflation would have eroded the buying power of your $100,000 to $86,700.
So while you want to make room in your portfolio for a 10% cash allocation… Teeka also suggests you set aside up to 10% for bitcoin… and another 2% for altcoins.
A Better Way to Beat Inflation
Once your cash and asset allocations are in order, you need to set up a steady stream of investment income… And outside of cash, our favorite way to do that is with what we call “Tech Royalties.”
That’s the name we’ve given to a subclass of crypto investments that pay you to hold them.
They provide you with a steady stream of income that increases in value over time as the underlying cryptocurrency becomes more valuable.
They’re also the perfect option for a 2% altcoin allocation, like I mentioned above.
Here’s how Teeka describes Tech Royalties…
Imagine owning a small stake in a portfolio of 10 music acts, and one becomes The Beatles while another becomes Elton John. This is the opportunity in front of you right now with Tech Royalties.
Some of these names will end up being worth hundreds of billions of dollars. It’ll be like owning a piece of The Beatles when they were playing nightclub gigs in Munich before hitting it big in the U.S.
You’ll own a piece of them and the income they kick out forever.
What’s great about Tech Royalties is you get capital appreciation along with monster 10%-plus yields.
Teeka and his team expect Tech Royalties to be the biggest crypto trend you haven’t heard of in 2022. (You can learn more from him right here.)
Despite Inflation, You Need Some Cash
If 2021 taught us anything, it’s that you should always keep some cash on hand – even in periods of rising inflation.
Whether it’s for an emergency… a bear-market buying opportunity… or you decide to quit your job and try something new like millions of Americans did this year… you’ll be glad to have cash when the time comes.
For example, you can use your dry powder to scoop up quality stocks like we did in March 2020… Or you can buy high-quality Tech Royalties experiencing a pullback.
When these assets recover, they’ll make 10 to 100 times your money – and in some cases, even 1,000 times.
Whatever life throws at you, cash typically “meets the need” better than anything else… So, if you haven’t already, set some aside today. And consider using a small portion of it to buy Tech Royalties.
Editorial Director, Palm Beach Daily