General

Re: So, where would you be putting your money right now?

Kakugo — Mon, 28 Jan 2008 00:15:39 GMT

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.

Re: So, where would you be putting your money right now?

xahrx — Sun, 27 Jan 2008 18:18:27 GMT

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.

Re: So, where would you be putting your money right now?

robdailey — Sun, 27 Jan 2008 07:54:01 GMT

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

Re: So, where would you be putting your money right now?

JimS — Sun, 27 Jan 2008 00:59:18 GMT

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.

Re: So, where would you be putting your money right now?

Kent C — Sat, 26 Jan 2008 23:50:47 GMT

You like ETFs?

Re: So, where would you be putting your money right now?

JimS — Sat, 26 Jan 2008 20:28:32 GMT

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.

Re: So, where would you be putting your money right now?

Kent C — Sat, 26 Jan 2008 15:44:24 GMT

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).

Re: So, where would you be putting your money right now?

JimS — Sat, 26 Jan 2008 07:57:13 GMT

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.

Re: So, where would you be putting your money right now?

truemyth2000 — Sat, 26 Jan 2008 05:36:31 GMT

what about property?

Re: So, where would you be putting your money right now?

LUCHAC — Fri, 25 Jan 2008 04:13:15 GMT

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.

Re: So, where would you be putting your money right now?

Kent C — Thu, 24 Jan 2008 06:31:01 GMT

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.

Re: So, where would you be putting your money right now?

johnnyronny — Thu, 24 Jan 2008 06:10:59 GMT

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!

Re: So, where would you be putting your money right now?

Mark B. — Thu, 24 Jan 2008 05:41:43 GMT

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. :)

Re: So, where would you be putting your money right now?

Kent C — Thu, 24 Jan 2008 05:06:38 GMT

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.

Re: So, where would you be putting your money right now?

Niccolò — Tue, 22 Jan 2008 22:50:54 GMT

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.