How a Business Solves Inflation and Tax Uncertainty with Alternatives


As advisers and investors seeking solutions to rising inflation, Fred Hubler, president and chief wealth strategist at Creative Capital Wealth Management Group, based in Valley Forge, Pa., Believes his company has a solution.

“We’re pretty sure inflation is going to be persistent,” Hubler said. “I was at an event where a speaker asked the audience who owned rental property to raise their hands. Then they asked whoever would lower the rent when inflation subsided to lower their hand – and no one lowered their hand. If you ask if wages will go down after inflation subsides, you won’t see many hands. It is very difficult to come back on the prices of a lot of places where we spend money. It does not make sense to view inflation as transitory.

To illustrate inflation, Hubler asks people to put items they might be interested in in the “Saved For Later” section of their Amazon cart on a Friday, then check prices again on Monday, which usually results in an increase. of several prices.

This puts the typical retirement investor in a bind, Hubler said. The returns they receive from their investment portfolio do not go that far in times of inflation. The danger is that these investors, who constitute a large part of the clientele in the wealth management industry, will start to aim for yield.

“When you’re looking for return, you end up buying things that you wouldn’t normally want to own and taking unnecessary risks,” he said. “We have been pessimistic about the stock market and think we have been waiting for a correction for a long time.”

Gold, a traditional hedge against inflation, is also problematic for retired investors because it doesn’t generate any income, Hubler said, and the best way to invest it is to buy it directly, which results in costs of transporting, storing and selling the asset.

“Lately, we think cryptocurrency has been a better hedge than gold, although we like the idea of ​​durable assets as a hedge against inflation,” he said.

Founding a RIA in the shadow of the headquarters of investment giant Vanguard, Hubler is carving a niche for creative capital by specializing in alternative investing. Alts don’t have to deal with government markets, he said, which means fewer alts are trading at high premiums or discounts.

Hubler develops yield-generating solutions in several different alternative asset classes.

“We have used several versions of private preferred stock,” he said. “These are companies with public common stocks that have an offering of private preferred stocks that tend to pay around 5.5% per annum, which means that we get a reasonable return without going crazy taking risks and that ‘they have no exposure to fluctuations in common stocks. “

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