Tomorrow I meet with my financial advisor to look over my portfolio. It hasn't done well in over a year (mostly mutual funds), mostly Canadian funds with, I believe, weighed heavily in Canadian and US markets and the financial sector. Its my retirement fund, and I'm fifty so I need to be careful. I don't have much faith in the stock market.
Ideas?
I'd say gold. Although tbh that band wagon was good to been jumped on 7 years ago when the Bank of England emptied it's gold stocks and crashed prices for a short time. Since then they've basically tripled. Then again, most of the price rise is really only the dollar that has fallen in value. I'd say get your money out of anything traded in dollars (American I mean), if you're looking at long term, because that currency WILL die, probably to be replaced by the Amero.
Then again, I have absolutely no experience in this so I'd say think twenty times before taking any advice from me.
Also, avoid any government owned retirement funds, once you fully realise what sort of a 54 trillion hole the government is in, you'll also realise there's no way they'll be paying out their retirement and medicare bills for long.
Silver, copper, and oil. Those should all be safe long-term investments, demand for which should continue to grow due to their industrial applications. Also, this might be of some use to you: http://www.bradspangler.com/blog/archives/419
Corporations are an extension of the state.
Also the investment funds targeted for the production end of the mentioned items-- PMs and oil.
What is the most stable, reliable currency?
Gold and other commodities.
I have done extremely well in the commodity market.
Nice thing about commodities is you can buy them as coins and enjoy actually having the beautiful coins as well as the investment potential.
eric lansing:the $US... and gold of course...
I would have said gold several months ago, but not now, wait until after February, and then maybe... MAYBE.
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My advisor told me if I'd bought gold back in the 80s when it peeked at around $600, that was actually more like $2600 in today's dollars, so buying and hold it I would have lost $1700 if sold today. She gave me the "hold tight" argument in regard to my portfolio. I have to buy something, its in an RRSP, be it stocks, bonds, money market, term deposit or cash.
Of course, that is the thing with gold. You DON'T hold on to it in good times. In good times you play the market. It is the bad times, like we are in right now, that you turn to gold. :)
My best advise is too invest in gold...directly. I found a very interesting site. You can buy gold at the price of the market. Check at www.bullionvault.com. Oh, BTW, I don't work for them!
Do your own choice!
johnnyronny:My best advise is too invest in gold...directly. I found a very interesting site. You can buy gold at the price of the market. Check at www.bullionvault.com. Oh, BTW, I don't work for them! Do your own choice!
Not allowed in an RRSP apparantly.
Yes, it is allowed in an RRSP, but only in 'certificate' form with a discount broker. So you would have to get a full service broker if you want to hold bullion.
My advice: first thing first, get rid of that advisor :-)
I'm only half joking. The inflation-adjusted return for broad stock market indices will be negative in the next 8 years, just like it has been in the last 8 years. We are in the middle of a 17-yr secular bear market. The advisor is obviously too young to remember that the $850 high achieved in 1980 was after a bull run in gold from as low as $35/oz. Sure, it dropped to $260/oz in the next 21 years . . . however, the $260/oz price itself was a record high that was only reached in May 1979, or roughly 8 months before the $850 peak. Sure, when we see gold, or any other class of asset, appreciate 250% in 8 months, it's time to re-allocate, but until then, ride with the winners, not the losers. The stock market has been losing for nearly 8 years! My guess is that the advisor never witnessed the 1966-1982 stock market bear market. Her career probably didn't start until the late 80's, if not the 90's . . . just like all those realtors minted in the late90's and early 00's . . . to them, the market only went up :-) She's definitely not worth 1% a year . . . which would have accummulated 20% of your networth when you die at 70, assuming you get to keep anything under her advisement.
JimS:My advice: first thing first, get rid of that advisor :-) I'm only half joking. The inflation-adjusted return for broad stock market indices will be negative in the next 8 years, just like it has been in the last 8 years. We are in the middle of a 17-yr secular bear market. The advisor is obviously too young to remember that the $850 high achieved in 1980 was after a bull run in gold from as low as $35/oz. Sure, it dropped to $260/oz in the next 21 years . . . however, the $260/oz price itself was a record high that was only reached in May 1979, or roughly 8 months before the $850 peak. Sure, when we see gold, or any other class of asset, appreciate 250% in 8 months, it's time to re-allocate, but until then, ride with the winners, not the losers. The stock market has been losing for nearly 8 years! My guess is that the advisor never witnessed the 1966-1982 stock market bear market. Her career probably didn't start until the late 80's, if not the 90's . . . just like all those realtors minted in the late90's and early 00's . . . to them, the market only went up :-) She's definitely not worth 1% a year . . . which would have accummulated 20% of your networth when you die at 70, assuming you get to keep anything under her advisement.
I suspect that all the advisors around here will suggest the same thing she does. What should I do with my mutual funds in the mean time? She insists that holding gold in the RRSP can't be done. Precious Metals funds? Natural Resources Funds? Right now, I'm heavily into Canadian bank funds, some emerging markets funds, and a far bit of bond (mostly gov't, provincial and federal).
Natural resource company stocks and funds can be put in retirement accounts, so can ETF's such as GLD and SLV. I have a sneak suspicion that, before this commodity boom is over (in perhaps another 5-7 years), we will have ETF's for corn and beef :-) The Wall Street and its shysters have to live off something; there's a lot of packaging material left over from the stock bubble and mortgage bubble party looking for things to repackage.
You like ETFs?
They are not ideal, but better than a lot of other sorts of paper instruments out there. Eventually, this form of investment vehicle will be exploited to death too by the hucksters, but we are not at that point yet.
Hi Kent, I'm an Investment Advisor in Georgia, I can't give individual advice without finding out about your background and investment objectives but I will make some general comments that aren't directed to you but a general audience (sorry - legal obligation). First, the most important thing for investors to keep in mind is that especially as they near retirement they need to continually shift funds into bonds and out of volatile investments. In fact the best way to look at a portfolio is as two sections, fixed income (bonds or in some cases CD's), and variable (I call it stocks but it includes -domestic,foreign, large/small cap, REITs, commodities/futures,etc). One (very crude) rule of thumb is to subtract your age from 120 and put the remaining percentage in stocks, and the other percentage in bonds. Example - a man 60 years old (120-60=60) 60% in stocks, 40% bonds. A 50 year old man (120-50=70) 70% stocks, 30% bonds. The current thinking among almost all reputable advisers I know is to develop an asset allocation based on your retirement goals or cash flow needs. Also it's important to remember that almost all advisers never recommend real estate (because they don't make money for recommending it), and many people who hold themselves out as "financial advisers" are actually brokers and paid on commission not by fees. This is an important distinction because an advisor paid on fees gets paid the same no matter what product he recommends (many brokers don't recommend index products even though many MANY studies show that indexed products out perform 90+ percent of actively managed mutual funds), and also gets paid whether you take the advice or not (they are not going to bug or pester you to do what they recommend). The problems with many advisers is that they just use whatever software they use and never question, or worse don't understand the assumptions that are based into their allocation software. Also almost no financial professionals understand Austrian Economics.
My personal thoughts,
Gold - seems to be a good investment, I would buy a little (perhaps 0.5% of my variable money - up to 10%) for every $10 drop in price (this is what people call "buy on the dips" but you should notice they never explain what that means or how to do it)
- When to start selling down your gold position is much harder to explain. If you ever see the New York Times, Time Magazine, or any non-financial publication declare exuberantly that "gold is the only investment" sell. It probably won't be the top, it will definitely be close.
Real Estate - a great investment in my opinion, but it take a lot of time to learn what you need to know to be a good real estate investor, the returns will probably be higher than you can get giving your money to someone else to invest for you. It will also require much more of your time, very much like having another job. Many financially independent people made their fortunes in real estate because if you take the time to learn how to do it right you just do the same things over and over and get rich.
Start your own business- an often overlooked way of making money is to start a business doing something that you love to do. The key is to start small and always keep your cash flow positive, but this is my favorite way because you get to do something you love to do and make money at it. I would say a big don't is to go out and buy some franchise that you become a slave to. If you take this route first you MUST READ "The E-Myth Revisited" by Michael Gerber.
-Good luck, Rob
robdailey: Start your own business- an often overlooked way of making money is to start a business doing something that you love to do.
How would you rate a wine and hot sauce store/brothel as a business to start? Do what you love to do has a specific meaning for me.
Gold may seem an obvious choice but I personally believe it to be more of an insurance against inflation (in the classical term) than a safe investment. Of course there's a catch: if we'll hit a true depression and the Asians will need to sell part of their gold reserves to have some quick cash (it happened in the past) the yellow metal will plummet. But as long as central banks will continue to "pump money into the economy" expect it to raise steadily.
A good alternative may be a fund related to work of arts: I know there are a few out there and they are good and bad for precisely the same reasons as gold. People tend to buy collectibles in times of "easy money" as an insurance against inflation but tend to sell them quite quickly when they need the cash.
I know many here will bash me for suggesting this but a good short or medium term choice could be defense-related stocks. As long as Uncle Sam and his allies will need bombs, mercenaries and fighter planes expect them to perform well.
One of my personal favorite are pharmaceutical and health-realted R&D societies. Unless something dramatic like the Vioxx scandal hit the frontpages they always perform well, though the best ones (Roche for example) are hard to come by and expensive to buy.