You can put your money in the bank. You can buy property. You can buy shares and hope they go up. Or you can do what investors have been doing for centuries, and get yourself some SWAG

Despite its more contemporary slang association, in the more staid investment world, SWAG isn’t short for loot or swagger. SWAG stands for Silver, Wine, Art, and Gold. Investment writer Joe Roseman, coined the acronym in 2011, noting that the four assets shared unique properties in terms of storing value. Specifically, they all are relatively easy to move, have a time-tested worth outside of government backing, and provide no income stream (and thus SWAG owners are not subject to income tax)

One or all of the components of SWAG have long been popular with investors. But like all investment decisions, putting your wealth in SWAG comes with distinct advantages and disadvantages, and it helps to understand them before you go out and get your SWAG on

The four asset classes that make up SWAG investing are:

• Silver: Silver is a precious metal that has been used as a form of currency for centuries. It is also used in a variety of industrial applications, which helps to support its demand
• Wine: Fine wine is another tangible asset that has the potential to appreciate in value over time. The price of wine can be affected by a variety of factors, including vintage, scarcity, and critical acclaim
• Art: Art is a collectable asset that can also appreciate in value over time. The value of art can be difficult to determine, but it is often influenced by the reputation of the artist, the rarity of the work, and the overall demand for art
• Gold: Gold is the most traditional of the SWAG assets. It is a precious metal that has been valued for its rarity and beauty for centuries. Gold is often seen as a safe haven asset, meaning that investors tend to buy it when they are worried about the economy

Benefits of SWAG investing

There are several potential benefits to SWAG investing. These include:

Diversification: SWAG provides a method of diversifying assets without exposure to the equity markets. The stock market and world currencies are all tied to one another to some degree — having all of your assets in just stocks and cash puts your wealth at the mercy of the markets

Of course, we trust those markets heavily. Most people aren’t counting on a 1929-style crash anytime soon (we hope). Most people aren’t afraid their bank is going to fail and take their deposits with them — we have the FDIC to thank for that. But stocks do go down, and currencies do lose value. SWAG, though, exists in a world of its own and can provide diversification independent from the markets

Not to mention, SWAG is tangible. This matters more than you might think. In a world where wealth is increasingly digital, and your entire savings are often just numbers on a screen, people have historically taken comfort in wealth that can’t disappear with the push of a button

Inflation protection: Tangible assets like silver, wine, art, and gold are often considered to be a good hedge against inflation. This means that their value may tend to rise when the overall cost of goods and services increases

Collectability: Some of the SWAG assets, such as fine wine and art, can be collectable items. This means that they may appreciate in value over time as they become more rare or desirable

Risks of SWAG investing

There are also some potential risks to SWAG investing. These include:

Liquidity: Tangible assets can be difficult to liquidate, meaning that it may be difficult to sell them quickly for cash

Valuation: The value of some SWAG assets, such as art, can be difficult to determine. This can make it difficult to know how much they’re worth

Storage: Some SWAG assets, such as wine and art, require special storage conditions. This adds to the cost of owning them

Pessimism doesn’t always win: For an example of the big pitfalls of SWAG, look to 2013. In that year, the S&P 500, the famous stock market index that provides an approximate barometer of the market at large, climbed 32 per cent. Investors in the big “value” plays saw their stock wealth increase nearly a third in one year. On the other hand, a SWAG investor would have seen their wealth shrink. A lot. Gold lost 30 percent. Silver fared even worse, losing a whopping 36 per cent that year. It was not a good year for shiny precious metals, to say the least. Good times for the economy at large do not translate into good times for SWAG. Usually quite the opposite. The more people trust the market and government to create and sustain wealth, the less they feel the need for insurance like SWAG

Is SWAG investing right for you?

SWAG investing may be a good option for investors who are looking for a way to diversify their portfolios and protect their wealth from inflation. However, it’s important to understand the risks involved before investing in any of these assets. It is also important to do your research and choose reputable dealers when purchasing SWAG assets

Caveat emptor!