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4 Tried and True Ways to Invest Money

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4 Tried and True Ways to Invest Money

There are always new, popular ways to invest money – carbon credits, cryptocurrency, etc.

But nothing beats the tried and true methods of investing money.

If you take a conservative, safe approach to investment, consider sticking to the classics.

Here’s a list of traditional ways to invest money. These methods have been practiced for centuries.

Cash Investments

Cash investments refer to short-term and low-risk investments. The benefit is that you receive money quickly and without risk. But the downside is that you make little money.

In our day, cash investments are usually FDIC-insured. They typically give return within 90-days.

Here are 3 common cash investments:

1. Savings Account

Your bank offers to store your money in a savings account. While it sits there, it accrues interest. Different banks offer various interest rates. The goal, of course, is to select the highest interest rate possible.

These interest rates are minimal. The average interest rate for a savings account is .09% according to the FDIC.

2. Certificates of Deposit (CDs)

A CD is like a ‘locked’ savings account. Your bank stores money in an account that gains interest. However, you are not allowed to remove the money until a set time.

CDs have a higher interest rate than saving accounts. But the obvious downside is that you must wait to reclaim your money.
You can retrieve your money from a CD, but there’s a penalty for it.

2. Money Market Account

With this account, your bank invests in short-term debt securities. In the U.S. they’re regulated by the SEC.

Money market funds can only invest in the highest rated debts. And your money is held within a bank.

For these reasons, money market funds are widely considered a safe investment.

Stocks (Shares)

Stocks (also called shares) are pieces of a company’s ownership. If you own 5% of company ABC’s stock, that means you own 5% of company ABC.

There are misconceptions about trading stocks. Some picture it as high-stakes gambling. While there are some risks in trading stocks, that’s not quite accurate.

There’s a safe and popular way to invest in stocks. It’s called an index fund.

An index fund buys stocks from many companies, usually the top companies. Even if a few companies do poorly, the collective nets profit.

If you want to start an index fund, Vanguard is a trusted institution.

Bonds

Bonds are IOUs. Essentially, you’re buying debt. Whoever is indebted to you must pay interest, and eventually the principal.

There’s a risk that the bond issuer will not be able to repay the debt. That’s why you must select bonds carefully.

There are many kinds of bonds, but the surest investment is to buy government bonds.

Governments are less likely to default than companies. Governments have higher obligations to pay off debts.

Additionally, governments are more financially stable than companies. Their money comes from taxation, rather than profit. And taxation is surer than profit.

The most popular bonds are treasury bonds, which are issued by the United States Department of the Treasury.

Real Estate

Investing in real estate amounts to purchasing properties. In turn, the owner can resell the properties at a higher price.

Or, the owner can hold the properties and lease them for profit. Typically, properties are leased to businesses or renters.

To invest in real estate, most individuals must take out a loan. This is particularly true when purchasing a bulk of properties.

Middle-aged Americans commonly own 1 or more properties. This is to supplement their career income.

When working full-time, passive income from properties is ideal. Later in life, these properties can be sold for retirement.

Some run a property business, wherein they manage many properties full-time.

Safe Methods are for Safe People

We all invest differently. Some prefer day trading, while others prefer buying properties.

There’s a lot of factors to consider when choosing how to invest your money. The options listed here may not be for you.

But these are certainly safe ways to invest money.

How do you plan on investing your money? Does one method look more appealing than another? Let us know your thoughts with a comment!

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Dalio: Capitalism Needs Fixing, US Dollar Upended In Next 5 Years

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Dalio: Capitalism Needs Fixing, US Dollar Upended In Next 5 Years

In a recent interview with MarketWatch, Ray Dalio, the billionaire founder of Bridgewater Associates, covered a wide range of topics. These include his thoughts on capitalism, China, the US dollar as the world reserve currency, and much more.

Three Problems

Dalio says the US is facing three distinct problems and is losing ground to China in many ways.

“There are three problems that are coming together,” said Dalio. “So it’s important to understand them individually and how they collectively make a bigger problem,” said Dalio.

“There is a money and credit cycle problem, a wealth and values gap problem, and an emerging great power challenging the existing dominant power problem. What’s going on is an economic downturn together with a large wealth gap and the rising power of China challenging the existing power of the United States.”

“It’s a fact that there has been a weakening of the competitive advantages of the United States over the last couple of decades. For example, the United States lost a lot of the education advantage relative to other countries, our share of world GDP is reduced, the wealth gap has increased which has contributed to our political and social polarization.”

Challenges the U.S. Face

To illustrate the challenges that the US faces as it attempts to stay ahead of China and remain a world power, Dalio says we need to look at Britain and how they eventually lost their position as the world’s reserve currency.

“If you look at British history, the development of rival countries led them to lose their competitive advantages. Their finances were bad because they had accumulated a lot of debt. So, after World War II those trends went against them. Then they had the Suez Canal incident and they were no longer a world power and the British pound is no longer a reserve currency. These diseases almost always play out the same way.”

“The United States’ relative position in the world, which was dominant in almost all these categories at the beginning of this world order in 1945, has declined and is exhibiting real signs that should raise worries. There’s a lot of baggage. The U.S. has a lot of debt, which is adding to the hurdles that typically drag an economy down, so in order to succeed, you have to do a pretty big debt restructuring. History shows what kind of a challenge that is.”

“The United States is a 75-year-old empire and it is exhibiting signs of decline. If you want to extend your life, there are clear things you can do, but it means doing things that you don’t want to do.”

Capitalism Needs Improvements

Dalio is a capitalist (he didn’t become a billionaire through handouts). However, he does acknowledge that the system needs to be improved so that everyone has a chance at financial freedom.

“What has been shown is that capitalism is a fabulous way of creating incentives and innovation and of allocating resources to create productivity. All successful countries have uses for it. For example, communist China has chosen capitalism, which has been essential to its growth.

“But capitalism also produces large wealth gaps that produce opportunity gaps, which threaten the system in the ways we are seeing now.

“We have to be in this together. The system needs to be reengineered to do this. But if we don’t do this engineering well, we’re going to spend in an unlimited way and deal with that by creating debt that won’t ever be paid back, and we will risk losing the reserve currency status of the dollar. If we get into that position — and we’re very close — things will get much worse because we are living on borrowed money that’s financing our consumption.”

On Dollar as the World Reserve Currency

Dalio says we could see the US lose reserve currency status as soon as the next five years.

“Within the next five years you could see a situation in which foreigners who have been lending money to the United States won’t want to, and the dollar would not be as readily accepted for making purchases in the world as it is now.”

“The United States doesn’t have a good income statement and balance sheet in dealing with the rest of the world. It is running a deficit to the rest of the world that is financed by borrowing money so that we are producing liabilities.”

There is uncertainty in the markets ahead of the November election. With this, Dalio says there are two steps investors can take to protect their wealth.

“First, worry as much about the value of your money as you worry about the value of your investments. The printing of money and the debt should make you aware of that. That’s why financial asset prices have gone up — stocks, gold — because of the debt and money creation. You don’t want to own the thing you think is safest — cash.”

“Second, know how to diversify well. That includes diversification of countries, currencies and assets, because wealth is not so much destroyed as it shifts. When something goes down, something else is going up so you have to look at all things on a relative basis. Diversify well and worry about the value of cash.”

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Varney: Dems Bending Over Backwards To Help The Wealthy, Not Working Class

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Varney: Dems Bending Over Backwards To Help The Wealthy, Not Working Class

If you think the Democrats care about the working man, think again, says Fox Business host Stuart Varney.

He says the Democratic elite are bending over backwards to try and help their wealthy donors at the expense of the working class.

Just look at the breakdown in the negotiations for a new stimulus bill. The Democrats aren’t clamoring for another round of $1200 stimulus checks, they’ve let that fall to the side. Who benefits from another $1200 check? The working class, of course. The wealthy sure don’t need it.

The sticking point, says Varney, is a tax deduction. Specifically the SALT deduction that allows state tax payments to be deducted from federal taxes. President Trump put in a $10,000 cap on the deduction as part of his Tax Cut and Jobs Act. That’s not an issue for ordinary working class Americans, but does affect wealthy individuals in high-tax states, many of which are Democrat states likes New York, New Jersey, California and Illinois.

Varney says the Democrats clinging to this tax deduction for the wealthy at the expense of the working class tells you everything you need to know about their priorities.

“The Democrats are moving heaven and earth to help the rich. You heard right. The Democrats are running to the assistance of the top 1%. This tells you a lot about political change. If you thought the Democrats were all about working people, think again.”

He says the far left may want to tax the rich, but the Democrat establishment is looking to protect them.

“Maybe the socialist wing wants to seize your wealth, but the establishment is desperate to bail out their wealthy supporters. Specifically, they want to bring back the deduction for state taxes. Yes, that’s the SALT issue. It’s the big sticking point in the fight over the new virus package.”

He says for wealthy Americans living in Democrat states, it was a “major league” deduction. Without it, they are paying higher federal taxes.

“It was a major league deduction. It was a big tax saving. But that’s the old days. Now, no tax deduction. And the wealth, especially in high-tax Democrat states, are complaining bitterly. They’re paying more Federal tax, not less.”

Establishment Democrats are scrambling to get SALT repealed, says Varney, showing their true colors to their constituents.

“Oh, there is desperation. New York Senator Chuck Schumer, he is demanding a SALT repeal. So is Speaker Pelosi. She’s from California. So is candidate Joe Biden. The establishment is desperate to avoid even higher taxes in already high tax Democrat states which would make things even worse.”

“If SALT were to be repealed, the establishment helps its rich donors. It will be a Democrat gift to the wealthy. The main beneficiaries will be one-percenters. Forget ideology. Political self interest is what rules the Democrat elites.”

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Ron Paul: This Is The Biggest Financial Bubble In History

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Ron Paul: This Is The Biggest Financial Bubble In History

Dr. Ron Paul believes that we are in the biggest financial bubble in history. He also said that when it pops, it will be very violent.

In a recent interview with Kitco News, Paul covered a wide range of topics. Some of these topics include the Federal Reserve, interest rates, and the economy.

He was asked about the Federal Reserve’s dual mandate of full employment and inflation control. To this, Paul said the Fed shouldn’t even be in the business of worrying about either.

“They shouldn’t even be in the business of pretending that if they want a good, healthy economy, and they want as best the employment possible, and the most balanced pricing system, you have to get rid of the system. You can’t have this artificial system from the Federal Reserve,” he said.

Free Market Should Set Interest Rates

Paul said the free market should be the one setting interest rates. Additionally, when the Fed thinks it has control over things is when problems start.

“You have to have a market rate of interest, and you have to have a money supply that’s determined by the market rather than by the politicians, because we are seeing the results of many, many years of this, especially since 1971 with what is happening now, it’s the runaway spending, we can’t have the runaway spending, if we continue to do this, and the fact that they pretend that they can control things, every time they think they have control then there’s a major correction, which we are in the midst of.”

He said the big event was when the Fed realized last fall that the bubble was starting to pop. He also mentioned that it began doing everything it could to keep it going. This meant cutting rates to zero.

“The big event that turned this whole thing on was in the fall when it was realized that the financial bubble was collapsing and they have destroyed for many, many years the most important function of the market, in the money supply are the interest rates. So we destroyed the pricing structure and that’s why we have so many mistakes, malinvestment, too much debt, too much government, and it wouldn’t happen if you didn’t have a Federal Reserve system that thinks they can manage the economy through monetary manipulation.”

Gold and the Market

Paul said the Fed can print as much money as it wants, but ultimately gold is what underpins the markets.

“I remember when gold was legalized in the 70’s, everybody thought the gold price would soar up, but it had already gone up, but at the time, our Treasury Department and the IMF (International Monetary Fund) dumped a lot of gold just to try and punish the people who knew that gold was a haven. So there’s a lot of monetary and gold manipulations, but ultimately the markets are determined by metals, not by paper money.”

He said we are getting close to a “cataclysmic” end to the bubble. The unfortunate result is that a lot of people will be wiped out financially.

“We are coming desperately close to a cataclysmic end to the current monetary system. I happen to believe it’s the biggest financial bubble in the history of monetary policy for the whole world. And the correction is going to be very violent, and it’s already pretty bad. People are going to get a lot poorer.”

“The bills have to be paid, the economy is going to turn down, and a lot of people have already gotten a lot poorer, but it’s going to get a lot worse unless we wake up and return to some sound economic and monetary policies.”

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