Private Money - Cash Is King

Posted by Esperanza on May 1st, 2021

I don't know of anybody who hasn't been affected by the financial turmoil we have seen over the last couple of years. If you have any wealth at all then you will have seen some effect. This has made people think more about their investments and start seeking out other alternative investments.

On the other hand, when interest rates go up these funds are not good investments - they are losers. The reason they are not a good place to invest money when interest rates are rising: the bonds in their portfolio pay an interest rate that is FIXED for the life of the investment. Rising rates make them less attractive and less valuable as an investment alternative. Hence, bond prices fall. And that's what bond funds invest money in: bonds.

Drawdowns are important to look at too. Drawdowns are the peak-to-trough decline during a specific period of an investment or fund. It is usually quoted as the percentage between the peak and the trough. A drawdown is from the time a retrenchment begins to when a new high is reached (because you won't know the depth of the trough until the new high is reached). It is important to look at your investment in terms of drawdown as well as profit and look at the performance in terms of the severity and length of any drawdown.

Coins are a lot different from bonds. If you buy bad coins, they may never go up in value. They'll never lose all of their value. At most, they'd be chasing the inflation rates. With a bad bond, you might lose it all and end up with nothing. Good coin investments average between 8% to 11% . Clearly, coin investment returns are a lot better then the returns in the bond market.

Don't put all your eggs in one basket. Obvious advice, but many people fail to follow it. Many people think that they are on the right financial track by paying off the mortgage on their family home and then buying another property for investment purposes. Think about it! You have put all of your financial eggs in one asset basket - property. What happens if the property market collapses? Despite common thinking that this is a safe way to invest, the outcome is very risky. You have invested all of your well-earned money into only one area.

After the investment goals are set, now is the smart technology time to figure out which way to go. Depending on these goals, you can choose a college fun, retirement fund or brokerage fund. Choose a vehicle that will aid you in achieving the goals that you have set. Of course, there is nothing wrong with going in more than one direction. This is usually the best way to handle investments for beginners because they get to see the differences in their investment choices.

If the stock starts to rise, you sell a third at .50 and then another third at .00 and so forth. If the stock starts to fall, you also sell a third at .50, then another third at .00 and the final third at .00. In this way, you will never lose all your money, however you have also put a cap on the total profit you will make on the investment. This I have found to be the best and safest method for investing in speculative shares. In 1987, my husband and I were saved from the severe losses of the Wall Street crash because we were well and truly out of the market by taking our profits beforehand. Like all systems, this strategy will only work as long as you obey the rules and do not get too greedy.

These options listed above are not the only investments for beginners. There are other options that may be appropriate for you. It depends greatly upon the amount of capital you have. It also rests on whether you want money in the short term or an investment for the future. Some investments are excellent as life-long investments, while if you want to make money quickly then you will have to take more risks.