OK if I’m saving for old age, is there anything that is safe? I’m not asking that there be no risk, but is there something i can put my money into that I don’t have to worry about it tanking. How about real estate (not for speculation, just a regular house)?
It can’t be made. There is only so much.
But taxes on unimproved land may kill your investment.
Buying a single house is putting all your eggs in one basket, and is considerably less safe than buying into an index fund or similar. Pretty much the only thing out there that’s guaranteed not to tank are treasury bills, but the return on those is pretty low.
US Treasury bonds are usually put forward as the quintessential low risk, low reward investment.
The first thing you need to invest in is an education. Pick up Investing for Dummies or one of the Motley Fool books (check out www.motleyfool.com).
In a very small nutshell: what you invest in should depend on how much time you have until retirement. When you are young, invest in more risky things (like stocks) because you will probably get a higher return than if you invest in safer things (like bonds) and you have time to make up for any bad luck. As you get older, shift more of the portfolio into safer things (so you don’t lose out when you don’t have time to make it up).
Now, the best way (IMHO) for the average person to invest in stocks is to invest in broad market indexes, both domestic (i.e., the S&P 500, Russell 2000) and international (there are several good funds that focus on different parts of the world or different slices of the world (i.e., Europe or Emerging Markets)). You can do this through mutual funds or exchange traded funds. The key is to diversify and stick with it (i.e., don’t sell just because the market is down–in fact, buy more if you can).
But don’t believe me, do some reading.
Invest in things you love.
Cars, horses, antiques, coins and stamps, whatever.
The basic premise of “buy low, sell high” still holds and the hunt for the deal, the learning and interacting with people who enjoy the same things you do will keep you young and add to the richness of your life.
And that’s as rich as anyone will ever be.
Reminds me of a (New Yorker?) cartoon from the late 70s. A businessman is on the phone yelling at his stockbroker: “Sell the whole portfolio and put it all in old comic books!”
Which, in hindsight, might have been a pretty good investment decision.
Typically the stock market and the bond market have an inverse relationship. I invest in both, and lately my bond investments have been doing well.
You could try medals- as in WW1 etc. They no longer issue those, they appreciate. Even better, each one has a history, so it is not only investment, it can be a hobby.
[British Accent]Gold. For centuries the worlds leaders have always invested in gold. The value of gold is allways increasing. You too can invest in gold if you call this number we’ll send you a pamphlet…[/British Accent]
It is true that in times of economic turmoil, the price of gold rises, unfortunately I think it has already risen.
The only proper answer to this question is “nobody knows.” If anybody knew, all the money would be flooding over to there.
None of the alternatives mentioned work except for the very generalized advice from Rand Rover. Diversity is always mentioned as a panacea because in general, i.e. in normal times, some aspects of the economy may fall but others will continue to rise and spreading your money around insures you from disaster.
These aren’t normal times. The stock market is down 30% and that means all your index funds are also down 30%. The housing bubble has collapsed. On the news last night was a feature about Florida, in which houses are beginning to sell but only at 60, 70, even 80% off of their former prices. Commodities are tanking. Gold prices are up, but if you buy them now you’re buying at historic highs. How much higher can they go before the inevitable fall when the economy and stock market recover? The cartoon joke about old comic books points up the fragility of the collectibles market. The comic collectibles market crashed early and hard. Most other collectibles are overpriced.
So what does work? Specifics instead of generalities and the hard work of thoroughly investigating the market.
Some stocks will remain good buys despite the overall trend. The day the market plunged 777 points, every stock on the S&P 500 fell. Except Campbell’s, the soup people. Why? I don’t know. But somebody must have looked into them and decided they were worth the investment.
Flipping houses is not something that will come back into vogue soon. But in a country expected to add 100,000,000 bodies in 40 years, housing will always be a priority and so will the stores to supply them. Some real estate somewhere is a good investment. You need to find out where. It may not be where you live. Housing prices across much of the old industrial northeast have fallen for decades. Many inner city, and even inner suburban ring, houses will never sell for more than they do now. Many cheap condos elsewhere will never find second buyers willing to sink money into them when they can get a brand new one for a similar price. For decades most of the growth has taken place in the Sunbelt. So that’s the place to go. Or is it? With global warming a reality and most of the south and west already running out of water, will that growth continue for another several decades?
The green movement will not be going away. Ten thousand companies will spring up to do everything from mundane jobs like adding weatherstripping and insulation to old houses to producing cutting-edge technologies that we don’t yet have. Some companies will go bankrupt, others will become huge. Smart investors will learn enough to tell which are which.
In short, there’s money to be made over the long term by investing in bad times. But I can’t tell you how long you’ll have to wait or what specific products to buy. You need to do tons of hard work in learning everything you can about any potential investment. If you do the work right, you’ll be rewarded.
If not, you’ll understand that the long term means 100 years and is averaged over many short-term and individual gains and losses. Maybe this crisis has finally shaken the notion out of our heads that everything always has to go reliably up. Why do you think the people who lived through the Great Depression never were able to shake the memories of that time?
I must disagree with this as an investment strategy. By all means do this for enjoyment but these are not “investments.” I can’t tell you that you can’t make any money this way (my mother is an antique dealer) but they are inanimate objects with no intrinsic value, only the value that collectors are willing to assign to them. A company is an entity with an objective of making money, and on the whole they do, so it is wise to invest in the stock and bond markets for future growth as described in above posts.
I have received this advice from more than one successful financial advisor.
BTW the time to get out of stocks was a year ago. Now is the time to get in.
Sort of. The part of the comics market that crashed was newer self-proclaimed “collectible” comics. Old comics held their value pretty well.
For example, if our hypothetical 1970s tycoon had bought what was then the most valuable comic, a near-mint copy of Action Comics #1 (the first Superman comic), he could have purchased it in the $15,000.00 - $20,000.00 range.
In today’s market, the same comic has an estimated worth of $1.3 million.
But in general, you’re right. Collectibles are very tricky. There was a time when stamp collecting was an enormously popular hobby, and everyone thought old stamps would always be worth a ton of money. These days, hardly anyone cares about old stamps, and you see collections auctioned off for next to nothing on a regular basis.
So, as with any investment, collectibles carry risk, and you really need to understand the particular market to do well.
Returning to comics, I don’t think they’re a good investment these days. Much of their value hinges on childhood nostalgia, and how many kids even read comics today? Once the last generation of people who grew up reading comics is gone, the collectible comics market will vanish with them.
When my grandparents moved out of the house their kids had grown up in, they needed to collect some extra cash for a down payment on the new house-something like $10,000 beyond what they had in their savings account. My parents were expecting to loan them some money, but my grandfather started rooting through boxes of old records. By the time he was done, he’d found records of savings accounts at a dozen different banks around town; and when he went around to them, with his account numbers, he ended up finding more than enough to cover the down payment.
Teenage me was puzzled at the time–why would you not keep your money together in one bank, avoiding the risk of forgetting where all of those different accounts were? But it made perfect sense to him–he was born in 1908, and wasn’t about to trust all of his money to one institution that could go under & take it all with it (FDIC or no FDIC).
I imagine that those of us living through these times are learning some rules of investing in stock & purchasing real estate that will seem very quaint to our grandchildren …
Investing in collectables is a bad idea, unless it’s also your hobby and you have a lot of fun doing it.
Real estate, Bonds, bullion.
But the Market is still a good investment. Ride it out, don’t try to time it.
In fact, now is probably a good time to buy a lot of stock. Prices are low and the market historically bounces back; it will this time too.
Every investment has risk, but there are a few investments with little risk. With T-bills, the only risk is government default and if that happens retirement will be the least of your worries, likewise FDIC insured accounts are almost risk free if you don’t include inflation as a risk.
Yield generally varies inversely to risk, so the biggest risk may be not taking enough risk.
This points up the need to research your subject. What you say is true, but the real lesson to take away from it is that the only comics who have that sort of value are the old comics that remain in near-mint condition. There are only two, maybe three collections, of 40s comics that survived in near-mint. People keep buying and selling issues from those collections and getting higher and higher prices on them. But unless you’re a billionaire and can afford $1.3 million for a comic, comic collecting as a whole has no especial value. Certain individual comics may be worth money, but it’s folly to suggest the field as an investment except at the extreme highest and rarest levels. That holds true for most fields of collectibles today.
The Dow broke the 9000 barrier earlier today. That may signal an end to the carnage. It’s true that in the long run stocks are certain to come back. As we’ve seen there are just no good alternatives for investments. But you also have to remember that the DJIA hit 9000 for the first time on April 6, 1998. It’s shown 0% growth for the decade. It you could have timed the interim values properly you’d have made money. Nobody can plan on timing, though. You have to look at your needs and your time frame and make your best guesses.
Clearly the solution is to raise enough capital to buy a $1.3 million comic book, then resell the individual pages for a profit. You know, like condos.
I didn’t notice money market accounts listed in the responses so far. Forgive me if I missed them. They’re less risky than stocks and usually make a little more or less than 4%.