Avoid Investment Mistakes

Posted by Esperanza on April 29th, 2021

Is it inflation or deflation that is coming? This is the question that people are asking at the moment. They weren't asking this a couple of months ago. Everyone was thinking that inflation was on the agenda. Whichever comes you need to be sure that you preserve your wealth and one way of doing that is through alternative investments.

Another reason for thinking about alternative investments like stamps and art is that they aren't correlated to movements in stock markets. This means that if we get deflation and the stock market falls a lot then these assets are unlikely to match these falls.

In fact, Ibbotson's has stated they are readjusting their future outlook of market returns from about 10%, historical average, to about 9% returns from equities. This means that taking out 8% is going to be a pipe dream and, more to the point, really not a good idea.

Second. When the stock market and real estate markets aren't performing well, the Gold and Silver markets are. At the time of this article, the price of silver has gone up over 100% during the last 6 months. And you don't have to take my word for it... just Google it and you'll see.

Though not making any investment or delaying any investment at a later date is a huge mistake, but making investments before you are capable to do so is a still bigger mistake. You must first strive to bring your financial situation on the personal front in order and then should start making any investments. Like first clean up your credit, pay off your credit card loans or any high interest loans you may have taken, and then park at least four months of the expenses for living in your savings. Once you have done this, you are just ready to go.

Mutual funds haven't changed all that much in the past 40 years. In 2011 and beyond some will still be good investments, and there will still be 4 basic types to choose from: money market, bond, stock and hybrid types that represent a combination of the other three. The difference between then and now: more fund companies competing with a confusing number of alternatives and cost structures. What hasn't changed is that all fund companies make money when you invest with them. Some just make more than others.

In today's real estate market, many LTV's are between 50 - 60%. This means that real estate values would have to drop by half before your principal investment would be at risk. At no time in history has this ever happened, so for the most part, this is considered a very acceptable risk. On top of this, there is a second layer, or level of protection for investors. It's called the Buyout Agreement. This is a contract whereby you are guaranteed to get your money back if the borrower defaults for any reason on your note. Keep in mind that this second layer of check here protection is not offered by most trust deeds, so you must ask for it.

You will need to find out what funds are available to invest from your income so a good start is to do a budget and make your goals part of your budgeting. To achieve your investment goals it is important to understand what you want out of your investments and make your choices accordingly.