Tulips from Amsterdam

What alternative investments should we be considering in order to keep the value of our monies intact? Is it too late for gold, what about silver, or oil or any other precious commodity? No one seems too keen on keeping their savings in US Dollars either.

So what options could we consider in these interesting times? Does history have the answer for us?

Just imagine living back in the seventeenth century and seeking out independent financial advice. Even then it was important to preserve your wealth as well as look for opportunities for growth. How would you have responded if the advice given to you then was to ‘Buy tulip bulbs’?

In 1593 tulips were first imported to Holland. The introduction of this unique flower made it widely sought after in the country. The bulbs, due to a mutation, started to come in all different variety of colours. This made them very attractive and led to dealers in 1636 and 1637 to start dealing in these bulbs in a big way. Speculation on the tulip bulbs took off. ‘Tulipmania’ had arrived in Holland.

For some reason, which we today can find hard to understand, prices started to rise quickly as everyone felt that they must have one, after all the more bulbs you had, together with the different strains of colour, became an important reflection of your status in society.

Before long the Dutch were willing to pay more and more for these bulbs, utilizing their entire savings and selling other assets such as property, animals and even dowries in order to get more tulip bulbs. In true ‘bubble’ fashion the tulip managed a near twenty fold increase in value in one month alone. At the peak of the market one bulb reached the price of a house in Amsterdam! All of this down to good old ‘supply and demand’ economics.

However as with the ‘Emperor who wore no clothes’, questions were asked. Then the price suddenly began to drop rapidly which led to people panicking and then selling their tulips regardless of whatever losses they might incur. Government attempts to halt the crash failed. Many lost their entire savings or even went bankrupt.

The moral of the story – If you wish to impress your wife/girl friend, stick to diamonds! If you wish to preserve your wealth, make an appointment to see a good Independent Financial Adviser. We have a choice of four.

Call 01626 833225 to find out more.