Wealth

It's easy enough for Warren Buffett to tell investors that "over the long term, the stock market news will be good"; his kids are already through college. The rest of us may not be as sanguine about the almost 30 percent decline in our retirement savings, the plummeting values of our houses, and the fear that we might go to work tomorrow to find that our entire department has been sacked. In fact, the riposte from British economist (and advocate of government stimulus) John Maynard Keynes is starting to seem more appropriate: "In the long run, we are all dead." It's understandable if the only investment option that seems attractive to you right now is the one made by Sealy. But there's a problem with stuffing your cash in the mattress: It's too risky.

No, you won't lose your life savings by sleeping on it, but it will shrink—relentlessly—year by year. Despite the wild swings in inflation expectations recently, the long-term trend is that prices have climbed by around 3 percent a year. And even though there's some fear of deflation in the short term, with the government pumping money into the economy at a dizzying (even Keynesian) rate, your purchasing power will erode over time. By the time you retire, or even by the time today's tweens head to college, you will have lost significant ground. Plus, as hard as it might be to imagine right now, the fact is that when bear markets end, they tend to do so violently, with surges of 30 to 40 percent. So although the recent roller coaster has been painful, your best bet is to stay invested. That said, several investment options offer some shelter from the storm...and lots of upside once it passes.

"I recently heard it said that you don't have to exercise every day, just the days on which you choose to eat," says Ed Dower, president of American Eagle Wealth Advisors in Gold River, California. "That's a lot like investing. You don't need to have any money in the market, except for the funds you want to grow. Even if your only goal is asset preservation, you need enough growth to outpace inflation." 

Here are seven investment options that have shown resilience in past downturns and nice rewards in good times. And every one of them offers a better return on your cash than anything sold at a furniture store.