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Get Rich with Exchange Traded Funds (ETF)

Updated on February 13, 2011

Our Inflationary Future and ETFs

Do you believe that the U.S. is printing too much money? Do you believe that commodity prices will soon be going up? If so, you may want to invest in ETFs.

ETFs are Exchange Traded Funds that are based on commodities. They are listed on the stock exchange just like stocks and include their own symbols. Some of these ETFs are directly connected to a commodity, while others are leveraged with that commodity. Some invest in a basket of commodities allowing you to spread your risk.

You can speculate on a commodity through futures also, but for the average investor, ETFs are a much safer way to speculate on rising prices with a commodity than future contracts. A small downturn in the market can eliminate all your money when dealing with futures.

The Housing Boom

Inflation makes some people rich while impoverishing others. Generally those holding savings and bonds lose purchasing power. People holding stocks and commodities tend to break even, while those owning assets through leverage gain wealth.

In the past, one of the best investments was commercial property. I know several people who got rich buying houses and apartment complexes. They would pay around 10% of the value of the property for a down payment and finance the rest. The property would go up in value faster than the rate of interest on the loan.

For instance, take a $100,000 dollar home. Pay $10,000 down and borrow $90,000 from the bank. If the property gained 20% value the next year, while interest was 10%, then the house would be worth $120,000. You would have $30,000 equity while only spending $19,000 ($10,000 down plus $9000 interest). This would be up to a 57% return on your money. This doesn't even include potential rental income that would more than cover operating expenses.

For years this was a winning strategy for millions of people to get rich due to heavy government subsidies in the housing industry. Thousands of books were written on the subject and even TV shows capitalized on it. Today though, the housing bubble has popped. We are still waiting for banks to begin selling off excess inventory, so no one knows when the bottom will be reached.

Getting Rich in the Next Decade

Did you miss out on the housing boom? Opportunities to get rich will come and go. Until banks begin to actively auction off their excess housing stock we won't know the true extent of the housing crash. For now, I would stay out of housing unless you are an expert with years of experience.

The next decade will be the decade of commodities. This will be the road to riches. ETFs and double ETFs will be the way to go. Inflation pushes up prices and ETFs will allow you to capitalize on those price increases just like housing investments capitalized on rising property prices while using bank money.

Here are some great ETFs to invest in:

  • SLV: A ETF which buys and sells one ounce units of silver. Industrial uses for silver give this metal a great future as mining will probably not keep up with demand.
  • GLD: An ETF which buys and sells tenth ounce units of gold. Considered to be the basis for money for centuries, this metal may be reborn with the death of fiat currency.
  • PPLT: An ETF based on Platinum. Used heavily in industry.
  • PALL: An ETF based on Palladium. Another metal with many industrial uses.
  • DBB: An ETF based on the Deutsche Bank Liquid Commodity Index. Allows you to invest in aluminum, zinc and copper.
  • URA: An ETF based on Uranium. Government regulations and environmentalism have totally destroyed the nuclear power industry in America. However, while the U.S. is looking backwards, other countries are embracing the future.
  • USO: An ETF based on oil. As more countries join the industrial age demand for oil will pick up. There is also speculation that oil reserves may begin dwindling resulting in even more price pressure on oil.
  • AGQ: (ProShares Ultra Silver) An ETF based on leveraged silver at a 2 to 1 ratio.
  • UGL: (ProShares Ultra Gold) An ETF based on leveraged gold at a 2 to ratio.
  • DBA: Invest in agricultural products through this ETF. Includes corn, wheat, soy beans and sugar. During severe inflation, food products will command a price premium.

Comments

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  • Powerpoe1 profile image

    Powerpoe1 

    7 years ago

    Thank you very much for the information listed in this hub. I'm definitely looking at new ways to invest. (ETF) sounds like it's the way to go! If you take a look around, you'll find businesses everywhere that are buying gold, silver and old coins.

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