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Where is safe to invest on the ASX?

Australia is in a bizarre state where normal economics has been completely thrown out of the window. Is it possible to find anywhere that’s safe to invest? Record low interest rates and QE are not signs that things are going well.

You can certainly park your money in cash – Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) will welcome the bank deposit – but the savings interest rate is so low savings in the bank now offers a lower return than inflation.

Bonds aren’t much better. You may be able to benefit if bond values rise, but bond values can decline too, and the interest rate offered is also minimal from government bond issuers in Australia and in other safe countries.

‘Shares’ is certainly the best asset class to hold for the long-term in my opinion, but as a whole I think it’s probably the most volatile.

Some investors might say that gold is the place to be in volatile/down times. Why does a lump of gold metal deserve to go up in value when markets go down? I have no idea. But apparently it does.

Owning actual gold bars is probably a bad idea. It doesn’t do anything, there’s no cashflow, and you’d have to pay for security and so on.

Gold miners could be an interesting alternative. They could benefit from rising gold prices as well as ramping up production. Shares like Newcrest Mining Limited (ASX: NCM) could be interesting, particularly as it pays a dividend.

Real estate is supposedly another less volatile area. I don’t think residential property is the way to go, but quality commercial real estate investment trusts (REITs) could be defensive ideas such as Rural Funds Group (ASX: RFF) or Arena REIT No 1 (ASX: ARF) which have proven to deliver consistent distribution and operating earnings growth for shareholders.

Foolish takeaway

For ASX investors, the easiest way to short the market could be with gold miners. But in normal times they aren’t good performers and go backwards as the share market improves. That’s why it could be best to sit on cash for the short-term until an opportunity comes along.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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