How to Invest ?

[ViribusUnitis]

I would like to add that it's impossible to talk about inflation without talking about politics. The goverments of the world control the currencies. They can make the currencies inflate, or deflate as they see fit. The question is what do the goverments of the world WANT the currencies do. And goverments decide what they want to do based on politics. There is simply no way around the fact that politics CONTROL what the goverment does, and the goverment controls inflation. It really is that simple.

The basic question of what to do with your money comes down to if you belive the politics will result in deflation, inflation, hyper deflation, hyper inflation, or no change. What you have to do for each changes rather dramaticly. And there is just no way to judge what the goverments are going to make the currencies do without talking about the politics, and govemrent's problems and motivations.

[70AMX]

If you want to see just how screwed we are in the US watch this

YouTube - EAT THE RICH!

But remember this video is about the US......but can be equally applied to most of the western countries as well.

BTW, I don't believe that this problem stems from either being left or right in politics as both parties are equally to blame...... and neither have our best interests in mind.

[VirtualVagabond]

Originally Posted by Saucy Sailoress

So, Kenny Chaos says real estate is out. HWMO says my bank account is a waste of space (at inflation of 10% or whatever, and a very rubbish interest rate) - so what to do with my cash? I don't want to sail off with it under my pillow - the pirates would have a laugh....

Incidentally, I'd like to avoid the political aspects of inflation (it's there, I know that, HWMO keeps telling me all about it.... and I don't care!) - I'm asking about investment

Well Saucy, I guess it's all perfectly clear now.

I never dreamed that an investment thread would be right up there with guns, anchors and sex!

The big question is, how much do you want to work at it?

Personally, I want to sail with minimum anxiety and I want to immerse myself in the experiences and places I'm visiting, not trying to juggle first world concepts and anxieties in a beautiful, laid back 3rd world environment.

If I had cash right now, I'd look to find where some smart money is going, and tag along.
Right now I'd be buying shares (stock?) in BHP Billiton, the biggest mining group in the world, and probably one of the most diversified.

Why, I hear you ask?

Because they're buying up their own shares for starters. Maybe they know where they're heading.

It's automatic diversification too. Both in commodities and currencies. They mine iron ore, coal, copper, phosphate, gold, etc etc, and in many different countries around the world. The backbone being here in Australia, where they own huge reserves in coal and iron ore, in a stable country with a strong economy.
They're a buy and forget about them share, and as long as China, India, Japan etc need iron and coal and the world's central banks are buying gold you'll be on a winner.

If you are tempted by gold, buy the gold mining company shares. If the price of gold continues up, all their unmined reserves go up too, and the value of the shares. And they're easy to buy and sell at whatever the market price is.

If you've the stomach for a bit more risk/return, leverage them (BHP or gold shares). In most cases banks will lend you up to another 50% on your holding of blue chip stock, and the total dividends will probably pay the loan interest while you get the capital growth. When you're ready to go sailing it's easy to sell down enough shares to settle the loan, and live off the dividends on a capital amount that will probably be more than you would have had initially.

Good luck, and I'm sure we'd all be interested to hear what you finally feel is right for you.

[cat man do]

Originally Posted by 70AMX

deleted goldbuggery

The fact still remains that you have cherry picked a point in time when gold has done well and then claim it to be the be all and end all
And have conveniently forgotten about the 1/4 of a century before that when it did nothing
and have forgotten about how it was actually illegal to hoard gold in the past
http://en.wikipedia.org/wiki/Executive_Order_6102

What's to say it wont be again?

[avb3]

A most interesting long analysis of why many consider the current gold situation to either be or approaching a bubble.

In the interest of full disclosure, I have been out of gold for over 6 months.

Yup, I missed the top, and I didn't buy at the bottom either.

I just made some money selling on the way up.

May I miss some future profits? Probably. Will I be caught in the future crash? Not a chance.

IMHO, copper probably has a better chance at maintaining its current trend due to industrial demand.

[boatgearguy]

ETFs, make money whether the market is up or down. During the recent trouble (earth quake & tsunami etc.) the Dow dropped like a rock but some "puts" jumped over 300% in a few days.

[70AMX]

Originally Posted by cat man do

The fact still remains that you have cherry picked a point in time when gold has done well and then claim it to be the be all and end all
And have conveniently forgotten about the 1/4 of a century before that when it did nothing
and have forgotten about how it was actually illegal to hoard gold in the past
Executive Order 6102 - Wikipedia, the free encyclopedia

What's to say it wont be again?

Investments change with the ever changing world. As I said before.... during stable times...Gold prices are stable too....Do you think we are in stable times now? Is the economic world getting better or worse?

Holding Gold was prohibited from 1933 to 1974 except for 5 ounces per person OR coins with a collector value....this was a time when we were on a gold standard with other countries (1933-1971) We are no longer backing our currency with Gold or anything else of value so it would be very hard to confiscate gold without a return to the gold standard.....even then the government would have a very hard time confiscating older coins minted prior to 1933....they are all collectible now....and many are available at the same prices as bullion gold (example:fractional pre33 European gold coins)



Snippets from yesterdays interview with Jim Rodgers
Jim Rogers on the Dangers of Price Inflation, the Promise of Commodities and America's Continued Decline

Daily Bell: Where is gold headed? Silver?
Jim Rogers: Everything I have told the world about gold and silver is going to continue to happen. Eventually gold will be a couple of thousand dollars an ounce, and probably much higher, as currencies become more debased, who knows how high. Silver will definitely reach new highs. As I have said, the US dollar is in serious trouble, and will be debased a great deal in the future, and eventually will be problematical itself. So gold and silver will be measured by the US dollar but I hope there will still be some sound currencies no matter what happens.


Daily Bell: You told us last time that the West was not handling the economic crisis (which began in 2008) very well. Are you more or less optimistic now?
Jim Rogers: The situation continues to be bleak, in the US especially. The politicians continue to dole out staggering amounts of money and the people who receive that money think they're better off. But the overall situation is worse. America's debt continues to skyrocket; the money train continues at a high rate, leading to more inflation and higher prices, and to eventually to more currency turmoil and eventually higher interest rates.
Somebody is going to have to take some losses, just as in Europe. The idea that the solution for too much debt and consumption is more debt and more consumption is ludicrous. It's embarrassing. Maybe the Europeans are starting to understand it and maybe they are going to do something about it, or be forced to do something about it, which is more likely.
In Portugal they are saying, they are not going to cut spending, well eventually somebody is going to have to face reality. In China, they realize they have an inflation problem and they are trying to do something about it; let's hope they do. They still have a blocked currency, which in my view, is part of the problem. But to their credit, they do continue to open the currency more and more, every month, every quarter, and they know they have to.
There are serious problems developing in India with their central bank and numerous other countries. Thailand, Australia, Korea, South Korea are all victims of the US central bank and the UK central bank easy-money policies. Staggering amounts of money are flooding into these countries, and there is no way in their power that they can stop this inflation or the subsequent price inflation. The situation continues to get worse for them

Daily Bell: Bernanke and the Fed – and other central banks – have apparently issued into the world's economy something like US$20 to US$50 TRILLION in loans, pump-priming etc. What happens when the velocity of money increases and all that money starts to circulate?
Jim Rogers: It's already happening; prices are going higher. Now the blame game starts and the government will blame it on draught or crop failure or whatever. Politicians will do and say anything to avoid explaining that inflation is a monetary problem. Their reactions are always the same and it's always astonishing to me. As President Ford said, "there is no problem" – and even if there is, it's not his problem. Well there are always people who are in denial; then the problem gets worse not better.










Snippet from zerohedge

Courtesy of Open Culture, Inside Job, the scariest Wall Street "horror movie" ever produced can now be seen for free. Charles Ferguson's masterpiece is a must watch for anyone and everyone who has even a passing interest in the intersection of finance, economics, politics, corruption, crime, complacency and above all, the human inability to predict the future when the only driving force is pure greed. And as Open Culture notes, "Inside Job can be purchased on DVD at Amazon. We all love free, but let’s remember that good projects cost real money to develop, and they could use real financial support. So please consider buying a copy." We can only hope that more commentators ilke Ferguson will step up and present the criminal events leading to the greatest economic and market crash since the Great Depression.





Inside Job, Oscar-Winning Documentary, Now Online (Free)


Or it can be downloaded here:
http://www.archive.org/details/InsideJob2010

[smurphny]

One could do worse than to listen to Jim Rodgers. He has been right most of the time and has a tremendous record of achievement wit TRP. Many countries are buying gold to hedge against the collapse of the dollar based world currency. Gold will collapse when world markets stabilize and that ain't on the horizon.

[cat man do]

What yield do you get from gold?

I have properties owned outright that tenants pay me cold hard cash to live in every week.

If I sold them, and put the cash up in gold at arguably the peak, how much cash would I receive every week from that gold to live on?

[Andy R]

Before deciding how to invest you need to understand what your goals are.
- When do you need access to the money? If it's a short time horizon then your investment should be less risky. If you don't need it for 30 years then you can have a more risky portfolio which should bring higher returns. It's very important to take into account when you might need the money.

Your risk tolerance and when you need the money are two of the biggest factors in determining what to invest in.

I'd second Eric's advice (post 20) for TIPS if your goal is to have your money not loose value to inflation. I also like Vanguard funds that he suggests.

Unfortunately I have a long time horizon before I need access to my investments so I am heavily invested in emerging & developing markets.

Another average rule of thumb is your portfolio should have the same percentage of low risk investments (like bonds) as your age. So if you are 35 years old you would have 35% bonds and the rest equities. If you are 65, would have 65% bonds and 35% equities.

I'd refrain from day trading and individual stock picking. If you feel compelled to do so, then just use like 10% of your portfolio for this and put the rest into low cost index funds.

FYI - Cruisers Forum has a sister site focused solely on investing. www.early-retirement.org. The founder of early-retirement.org is/was a cruiser.

[70AMX]

Originally Posted by cat man do

What yield do you get from gold?

I have properties owned outright that tenants pay me cold hard cash to live in every week.

If I sold them, and put the cash up in gold at arguably the peak, how much cash would I receive every week from that gold to live on?

Where do you come up with arguably the peak?
There is no mathematical way to pay our debts now and yet we keep printing more and more. We have 2 choices.... default on our debts (no possibility of that) or debase the value of the currency, historically this is what Central Banks do. Unless you can come up with a new way of getting rid of our debts.....we will be going down the road to much less valuable currency in the future... it's the only way we could possibly pay off the debts.
in the 90's When Mexico devalued it's currency... If you had 100k in Gold the day before they devalued....the next day you still had 100k....and if you had 100k in peso's the next day you had 10k (I don't remember the percentage of devaluation that they used) but the point is you kept your wealth stable without regard to what the banking cartels did to the value of the currency.
Stability of your acquired wealth is paramount....because inflation will eat away at your gains in any fiat currency. If your stocks, bonds ect are giving you a 8% return and inflation is at 10% you still are losing 2% of your money + paying taxes on the 8% gain...so how much are you really losing?

As far as what to do to get money from your investment in Gold.... you sell a little at a time for the currency that you are currently using. When holding stocks,bonds ect and you need money....you sell a couple of shares and now you have currency.....what is the difference? Oh yes.... there is a difference... no matter how few shares or bonds you sell....there is a paper trail and when you sell a small amount of Gold there is NONE. Think about the difference for a minute.........or two.....

[avb3]

Originally Posted by 70AMX

Where do you come up with arguably the peak?
When holding stocks,bonds ect and you need money....you sell a couple of shares and now you have currency.....what is the difference? Oh yes.... there is a difference... no matter how few shares or bonds you sell....there is a paper trail and when you sell a small amount of Gold there is NONE. Think about the difference for a minute.........or two.....

Don't try selling gold in Canada; there IS a paper trail and has been for some time.

Reason?

Money laundering, plain and simple.

[70AMX]

Originally Posted by 70AMX

When holding stocks,bonds ect and you need money....you sell a couple of shares and now you have currency.....what is the difference? Oh yes.... there is a difference... no matter how few shares or bonds you sell....there is a paper trail and when you sell a small amount of Gold there is NONE. Think about the difference for a minute.........or two.....

I don't want to give anyone the wrong idea.....
I believe that everyone should pay their fair share of Taxes, I just feel that I can report my actual gains to them instead of them telling me what they say my gains actually were, that way I am my own central bank.

[70AMX]

Originally Posted by avb3

Don't try selling gold in Canada; there IS a paper trail and has been for some time.

Reason?

Money laundering, plain and simple.

At what amount is reporting required in Canada?

[cat man do]

Originally Posted by 70AMX

Where do you come up with [COLOR=Red]arguably the peak?

Gee, I dont know

Does this line look normal and sustainable to you?
Will it just keep trending upwards forever?

There is no mathematical way to pay our debts now and yet we keep printing more and more.

USD may be roooted but I am in Australia, are the presses running here?

We have 2 choices.... default on our debts (no possibility of that) or debase the value of the currency, historically this is what Central Banks do. Unless you can come up with a new way of getting rid of our debts.....we will be going down the road to much less valuable currency in the future... it's the only way we could possibly pay off the debts.
in the 90's When Mexico devalued it's currency... If you had 100k in Gold the day before they devalued....the next day you still had 100k....and if you had 100k in peso's the next day you had 10k (I don't remember the percentage of devaluation that they used) but the point is you kept your wealth stable without regard to what the banking cartels did to the value of the currency.

So you admit that gold is just a hedge

As far as what to do to get money from your investment in Gold.... you sell a little at a time for the currency that you are currently using.

Good luck with that at your nearest shop buying food

Add: and your embolding your entire post did not make your argument any the more convincing, quite the opposite in fact

When holding stocks,bonds ect and you need money....you sell a couple of shares and now you have currency.....what is the difference?

I would actualy be expecting dividends, you know, that thing called yield.....................something gold does not have

Oh yes.... there is a difference... no matter how few shares or bonds you sell....there is a paper trail and when you sell a small amount of Gold there is NONE.

is that right?
Currently in some countries they are putting a ban on undocumented gold transactions

Think about the difference for a minute.........or two.....

Oh I have thought about it

Unencumbered rental property pays me a healthy amount of money every week that I can spend on whatever I like and the capital is preserved

Gold on the other hand gives me nothing every week and the only way I can get something is to eat into it selling it down until eventually there is nothing left but the memory of what once was.

Add: and the bolding of your entire post failed to convince me