Most of us know where you can invest money in good times, but when it looks like the sky might be falling, knowing where you can invest money and how to invest it becomes a puzzle. In 2014 and 2015 good investments might be hard to find, especially if yesterday’s good investments like stocks and bonds tank. This is not a prediction, but instead a “heads up.” You can’t prepare if you’re not aware, so let’s take a closer consider the sky.
Everybody knows that safe choices like money market funds and bank savings accounts don’t appear to be good investments for 2014 because they pay peanuts. But imagine if the sky starts falling: either interest levels ignite and/or the stock market tanks? In any event or both… where to invest money is the question of the day. Safe choices will look like good investments for parking money that must be safe.
Wall Street’s traditional response to where you can invest money: put about 60% into stocks with about 40% in bonds holding a cash reserve on the sidelines. Problem: in 2014 and 2015 losses in stocks will not be offset by gains in bonds… as was the case going back 30 years or so. If interest levels soar from today’s record-low levels, neither stocks nor bonds look like good investments.
For over 30 years interest rates were falling and bonds were generally good investments. With today’s ridiculously low rates (developed by our government to stimulate the economy) a rebound in interest levels is in the cards (as the government unwinds its stimulus). When that occurs, bonds will no longer be where to invest money for higher interest income with relative safety. Bonds aren’t good investments when rates go up; they lose money. That’s the way it works. How exactly to spend money on bonds in 2014 and 2015 if rates take off: reduce and opt for safety.
Stocks had been excellent investments five years running because the year 2014 began. This is at least in part due to government stimulus and cheap money. In a way, stocks were where you can invest money because nothing looked cheap aside from money (short-term interest levels were set at about one-tenth of one percent). With an increase of over 150% in five years, the downside risk in the stock market is mounting. This begs the question of how to invest money in stocks if the sky starts to look ominous.
Remember that the stock market is actually a market of stocks, which means that almost all stocks get hit when the market crumbles – but at the very least a few will undoubtedly be good investments. And the best way to find good investments in a negative market would be to watch the price action. For example, as the market climbed 30% in 2013, some gold stocks were down about 50% by early 2014. Unless you know how to spend money on or how to pick a specific gold stock… you should know where to invest money to acquire a piece of this step. The answer is to invest money in gold funds and let them pick the gold stocks for you personally.
The bottom line is that in 2014 and 2015 investors face an uphill battle, because both stocks and bonds look pricey. That displays a fresh challenge to today’s investor in search of where to invest money. We have been facing uncharted waters in this modern electronic world, where nobody really knows how exactly to invest or where to find good investments for the future. This includes the big investors like life insurance companies and pension funds.
My suggestion is to take some profits in your stocks and bonds, because the tide will turn eventually if not in 2014 or 2015. Then you’ll have cash reserve, so you can take advantage of the situation because the skies darkens. Smart investors are always searching for where you can invest money next, particularly when a big change of trend is in the cards. https://www.binomo.or.id At such times, yesterday’s underperforming sectors or industries often become today’s good investments.