It’s time to take a practical approach to your investments
Website design By BotEap.comOkay, you’re getting very negative real interest rates on your cash deposits, a rueful look at your pension statement or 401K account tells you to put off all plans to retire to the golf course indefinitely, and your financial planner or fund manager stands still pocket the commissions while you are still taking the losses. What should an investor do?
Website design By BotEap.comThe only answer, as I have found, is to do it yourself. Now I know that this is a hard message to sell to many people. I can really appreciate that holding down a job and keeping a family fed and watered doesn’t leave much time for anything else in life, but if you really want to see that light at the end of the tunnel and get ahead financially then sooner or later you will have to. push yourself and take control of your own investments. The alternative is to leave your money on escrow and watch the purchasing power of your cash erode at about 5% per year (at the last count), which means it would halve in 12 years.
Website design By BotEap.comAs for your stock market account, wouldn’t it be easier to let your overcharged and underperforming financial planner worry about it? Sure, if you want to help. him check out early The bottom line here is that sitting in his hands will virtually guarantee you a poverty-stricken retirement.
Website design By BotEap.comThe good news is that in today’s interconnected online world, there is plenty of help available if you were thinking of going it alone. Once you’re set up, it really shouldn’t take more than 10 minutes a day to monitor your trading account and keep things running.
Website design By BotEap.comSo let’s deal with the practicalities first: If you want to become an independent investor in your own right and ditch the financial planner for good, the first thing you need to do is find a low-cost online stockbroker, the kind that doesn’t offer advice. , but it charges really low fees for doing your basic buying and selling transactions. A quick Google search should soon fix it.
Website design By BotEap.comSecond, how do you know what is good to invest in? Simple; Go back to that 21st century interconnected online world I talked about earlier and look up free online charting services. There are plenty out there (I just found a free service offered by Stockcharts, for example, but that’s not necessarily a recommendation of the service. You’ll have to do your own due diligence). The point behind using a charting service is to find out what the trends are in the markets. In other words, the price of a stock, commodity, or bond may be doing one of 3 things: it may be going up, down, or trading in a range. From here, I would start digging into some basic line charts of various stocks, commodities, and mutual funds to find out what has been going up for, say, the last 3 years.
Website design By BotEap.comThis is where I can save you some trouble because, frankly, not much has been going up during that period. By “go up” I mean investments that would have given you a real return above inflation during that time. In fact, a quick glance tells me that aside from a few special niche markets, there are only one or two places worth our attention as of this writing, and that is the precious metals sector. Investors don’t have many friends in this world, but one of them is the trend and we should always try to follow it. Gold and silver have actually been on very strong uptrends for over ten years, folks indeed!
Website design By BotEap.comSo we’ve established that a good home for our hard-earned cash is gold, silver, and maybe a bit of platinum or palladium. Until those uptrends change, there will be no good reason to change your mind. Again, a quick search online will bring up several reputable services for buying and storing precious metals.
Website design By BotEap.comSo is it a case of job done then? Not quite, what about income? Precious metals can offer us some spectacular future growth in our capital (assuming current trends continue), but how about a little jam today?
Website design By BotEap.comThis is where my ‘barbell’ or double thread investment strategy comes into play. At one end of the bar I now have my precious metals, but at the other end I like to allocate about half of my investment funds to high yielding stocks that regularly pay good dividends. I prefer these stocks to growth stocks because there is a lot of authoritative research showing that high-yielding stocks with well-covered dividends easily outperform the most attractive growth stocks over any 5-year period you care to mention over the last century.
Website design By BotEap.comHigh-yielding stocks are often companies like utilities, telecom stocks, pharmaceuticals, and occasionally oil companies. These are usually strong, well established and, dare I say it, even bored stocks to own, but in my 20+ years of investing experience, boring is definitely good. And how do you find out what are the best performing stocks at any given time? You guessed it: do a quick 5 minute search online!
Website design By BotEap.comOf course, high yielding or not, I continue to avoid any stock that is trending down. It just so happens that most of the high-yield stocks I choose for my own portfolio are in a trading range, but the main point here is that I get paid while I wait for the trend to emerge. And I get paid about 5% per year generally, plus most stocks increase their dividends above the rate of inflation every year. If one of these stocks subsequently falls into a downtrend, I sell it, if it goes up, I hold it. I like to hold if I can, because it keeps portfolio management costs to a minimum. It really is that plain, plain, boring, and cheap, and it works.