Investments are designed to accomplish 3 major goals:
- Protect your principal
- Provide for a good return
- Minimize risk so you can sleep at night
The state of the global economy has been so bad that people invested in the stock market have accomplished none of the 3 major objectives of investing.
Last week from Wednesday-Thursday the Dow Jones Industrial Average dropped 675 points and closed at 10,771. This was a 6.4% drop. A loss of 6.4% in a period in a matter of few days is a cause of great concern for people that have worked their whole lives to secure financial security in retirement.
Worse yet, with severe issues continuing to linger with no apparent improvement, the real risk of another major blow-out in the market becomes greater and greater. Consider the lingering problems with
– political gridlock
– housing foreclosure
– deficit problems
– declining consumer confidence
– real inflation
– severe problems with the European economy
– the recent slowing of the Chinese economy
– lagging income
All of these problems make it highly unlikely that volatility will subside in the near future.
So what’s the answer. It’s not gold, that’s for sure. Gold prices were pounded on Friday, losing $100.00 an ounce or 5% of its value, certainly no financial security there. Gold closed at $1,656.00.
How can investors, protect their principal, get a decent return and sleep at night?
“Invest in Real Estate”
The real estate market has reached or passed the bottom in most cases. Rental rates are very attractive, it’s tangible, and best of all, doesn’t have the wild day-to-day swings of other major investments.
We’ve already had two major blow-outs in the stock market during the past 40 years, one in ’73-74, and one after the dot-com bust. Encourage investors to minimize their risk so they can sleep at night. Remember the expression:
“Strike Three And You’re Out!”