Why There's No Such Thing As a Safe Investment
I thought about the phrase "Risk-Free Investment" after I met with a couple at a networking event. We chatted a little bit, and the wife asked me what I did and specialized in.
I mentioned that I have a strong interest in financial markets and investments. She asked me what a "safe" investment was today. My response may have been a little too blunt; however, it's the same one I'll give you right now: In today's economy and financial markets, there are no safe investments. The best investment you can make is in your financial education.
Americans have been conditioned to "buy and hold for the long term," and dollar-cost average into a well-diversified portfolio of stocks, bonds and mutual funds. And if they do that, their retirement will be hunky-dory.
Unfortunately, the Dot.Com Bust and the Crash of 2008 blew that theory to smithereens. With the stock market bouncing 60% higher off the March lows, investors are breathing a sigh of relief. Other investors are parking their money in supposedly "safe" CDs or savings accounts.
However, in today's economy and markets, there is no such thing as a "safe" investment. Even if you make 1-2% in a savings account or CD, inflation is much higher than this - and in real (inflation-adjusted) terms, you're losing purchasing power and wealth.
What about the supposedly "safe" stocks and mutual funds, and "sticking with your long-term plan" like a financial planner or broker tells you? The problem with the long-term "buy and hold" strategy is the rate of change in the business world. There aren't very many so-called "blue chip" firms anymore - and the few that are today, may not stay blue in a few years.
If you still believe that the U.S. stock market is the best place for your money, you may want to read this article by Matt Taibbi, which describes Wall Street's Naked Swindle.
With any rule or statement, there are a couple of exceptions. Two investments that I believe are "safest" today - and two you should buy and hold for the long term: Physical gold and silver bullion. Richard Russell has a great article, how you can Learn From the Rich Man.
People who put their confidence - and leave their wealth - in paper instead of real assets will be very disappointed in the years to come.
I mentioned that I have a strong interest in financial markets and investments. She asked me what a "safe" investment was today. My response may have been a little too blunt; however, it's the same one I'll give you right now: In today's economy and financial markets, there are no safe investments. The best investment you can make is in your financial education.
Americans have been conditioned to "buy and hold for the long term," and dollar-cost average into a well-diversified portfolio of stocks, bonds and mutual funds. And if they do that, their retirement will be hunky-dory.
Unfortunately, the Dot.Com Bust and the Crash of 2008 blew that theory to smithereens. With the stock market bouncing 60% higher off the March lows, investors are breathing a sigh of relief. Other investors are parking their money in supposedly "safe" CDs or savings accounts.
However, in today's economy and markets, there is no such thing as a "safe" investment. Even if you make 1-2% in a savings account or CD, inflation is much higher than this - and in real (inflation-adjusted) terms, you're losing purchasing power and wealth.
What about the supposedly "safe" stocks and mutual funds, and "sticking with your long-term plan" like a financial planner or broker tells you? The problem with the long-term "buy and hold" strategy is the rate of change in the business world. There aren't very many so-called "blue chip" firms anymore - and the few that are today, may not stay blue in a few years.
If you still believe that the U.S. stock market is the best place for your money, you may want to read this article by Matt Taibbi, which describes Wall Street's Naked Swindle.
With any rule or statement, there are a couple of exceptions. Two investments that I believe are "safest" today - and two you should buy and hold for the long term: Physical gold and silver bullion. Richard Russell has a great article, how you can Learn From the Rich Man.
People who put their confidence - and leave their wealth - in paper instead of real assets will be very disappointed in the years to come.
Labels: Richard Russell gold silver robert kiyosaki rich dad dow theory letters conspiracy of the rich
posted by Brian Ochsner | 8:50 AM
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