If you're wondering what NOT to do with your money in the current economic situation, the answer is simple: Don't let it sit idle!
Due to rising inflation, letting your money sit idle means you'd have to increase your overall wealth just to make sure its effective buying power remains the same.
Money that's not actively being used is always at risk. As inflation is once again on the rise, the rate at which your money loses value accelerates. In other words: If your money doesn't actively generate a profit, it will actually decrease in value over time, as prices rise and your wealth stays the same.
Let's, for example, assume that the current rate of inflation is 5 % compared to the same month in the year before. This means that your $100,000 in savings from last year will effectively only be worth $95,000 this year. You'd need to make a profit of $5,000 this year just to retain the same level of purchasing power.
Can you retain your wealth with a savings account?
Different banks offer different interest rates on their savings accounts, so we can't know for sure how your personal account affects your overall wealth. What we can say is this: If you let your money sit idle in a savings account, that account would need to have a favorable interest rate at least as high as the current rate of inflation, just to prevent your wealth from decreasing in value.
Let's use another example: Your savings account would need to offer 5 % interest just to counteract a 5 % inflation rate. And the sad truth is: No bank can really afford to offer such high-yield savings accounts today.
The best you can hope for when putting your money into a savings account these days is that the value of your money will decrease slightly less quickly than it would without the account. In other words: these accounts don't offer nearly enough in terms of returns than would be necessary to keep you financially stable, let alone generate significant passive income and increase your wealth in the long term.
Actively investing your cash is the only sure-fire way to generate returns large enough to counteract inflation or even provide additional income. Here are some of the easiest ways to start earning enough money to break even:
- You can invest in the stock market.
- You can invest in real estate.
- You can invest in funds such as ETFs or mutual funds.
Actively investing in stocks, bonds, or real estate has been the primary method in which ordinary people have been able to fight inflation, as these investments are relatively low-risk while offering good returns – if you have a knack for choosing the right assets to invest in.
Funds such as mutual funds or exchange-traded funds (ETFs) effectively do the same thing, except they pool your money with the money they receive from other investors to make more significant investments on your behalf. This makes such funds an ideal solution for people valuing a hands-off approach.
Why Traditional Investment Strategies Still Aren't Ideal for Growing Your Wealth
You may have noticed that so far, we've only talked about making enough money to counteract inflation. That's because CARL believes that even actively investing in traditional vehicles such as the stock market isn't enough if your goal is to actually grow your wealth. History has shown that stocks, bonds, and other traditional vehicles are great at providing reliable long-term streams of income, but their returns aren't large enough to help you build a fortune.
The reason for this is simple, and it has to do with an old truism: Nothing ventured, nothing gained. If you invest in stocks, bonds, or similar vehicles, either individually or as part of a fund, you're investing in assets that have been registered with the Standards and Exchange Commission (SEC). The commission has several regulations designed specifically to prevent small-scale private investors from taking on too much risk. Thus, most traditional investment options are tailored to minimize risk, leaving you with a fraction of the profit you could make otherwise.
Many high-yield alternative investments offer significantly greater returns compared to traditional investments. And while the risk associated with alternative investments may be higher than the risk of investing only in conventional vehicles, you can easily manage it by employing risk-management mechanisms.
Since they're largely unregulated by the SEC, hedge funds have many more options for investing, ranging from traditional investments in stocks to private equity and derivatives. This means hedge funds can take advantage of high-risk, high-reward options to maximize returns. That's why CARL's quants can offer 15%+ targeted returns while most traditional investment options may never even reach double-digit returns.
Making money with hedge funds doesn't necessarily mean exposing yourself to greater risk, though. Since hedge funds have more freedom to determine what they invest in, they are free to use portfolio diversification to limit the risk factor. Similarly, they can utilize hedging strategies such as combining long positions with short positions on the same asset to minimize the risk to investors. That way, hedge funds have built-in risk management tools – in contrast to vehicles such as mutual funds, which are considered less risky but don't typically engage in hedging strategies.
Getting into hedge funds
As beneficial as investing in hedge funds is, there are some hurdles to overcome:
- Hedge funds aren't publicly traded
- They are only open to accredited investors
- They require significant initial investments
Since CARL realizes that hedge funds are the only way to still make money in a market environment burdened by high inflation rates, CARL's goal is to tear down these hurdles and allow all qualified accredited investors to take advantage of quantitative hedge funds. That's why accredited investors can get easy access to all of CARL's quantitative strategies at only a $20,000 minimum investment. And with 15%+ targeted returns, our quants are your best bet at making money on investments.
Hedge funds are an excellent investment: They can invest in almost any asset group, and many of them are structured in such a way that any additional risk is mitigated through hedging strategies. However, there is still one risk that traditional hedge funds can never fully mitigate: human error. Hedge funds are controlled by a hedge fund manager and their team of traders, analysts, and back-office staff. This means that the decision on which assets the fund invests in comes from the manager. Even with all the data available on such a monetary fund, hedge fund managers always mix in their own intuitions when it comes to investing. This means the most significant risk to hedge funds is often just human miscalculation. Perhaps the manager is acting on a good feeling which turns out to be misguided, or they simply undervalue or overvalue a particular asset.
Quants don't have this problem, which is one reason why they tend to outperform traditional hedge funds. Quantitative hedge funds use computer modeling and machine learning to create algorithms that value assets and make investment decisions, taking all available data on the market into account.
- Quants aren't prone to human error.
- Quants can take advantage of minute trading opportunities human managers might miss.
- Quants excel in high-volatility markets.
In short: hedge funds are the only sensible investment option if you want to make money – and quants are the future of hedge funds! That's why CARL specializes in quantitative hedge funds, allowing private investors to take full advantage of the power of quants.
Whether you invest just to prevent your wealth from losing value or to actually grow it, various investment vehicles are available, from stocks to hedge funds. But if you want returns that not only mitigate inflation but also help you build your fortune quickly and reliably, then quants are the way to go!
Thanks to CARL, using the power of quants to your advantage has never been easier. All you need to do is set up a CARL account and demonstrate that you qualify as an accredited investor, and you immediately gain unprecedented access to some of the most sophisticated quantitative strategies available today. With only a $20,000 minimum investment and no lock-up periods, it's easy to start investing – or to withdraw your funds if you suddenly need cash. Money invested in other hedge funds isn't nearly as liquid. And thanks to sophisticated algorithms, our quants offer 15%+ targeted returns, generating enough returns to beat inflation and then some. Contact CARL today to set up your account and start making money from your investments!