Invest in what works for you

The gold bugs are out! It’s pretty tempting since the precious metal has outperformed just about any other asset class in the last decade. For the early money in, this was great. Keep in mind, past performance does not guarantee future results. If enough people really believed gold would be at $3000+ next year, the price would already be driven up to that point adjusted for the time value of money at the risk free rate, presently (essentially 0%), meaning gold would be currently at $3000. As this is not the case, any forecasts being sold as certainties are not. Owning gold and other precious metals may be right for some people, but not before some of these other assets.

What works — anything that can earn you money, either passively or with a little activity

Stocks: Commodities can’t develop the next medical cure or music player. The stocks don’t necessarily have to pay dividends.  Not paying dividends just means that all of the funds are reinvested.

Real Estate: Rental income is a great way to bring in extra money, but beware, there are many pitfalls about the landlord business. Don’t overleverage. The rental business requires active participation to some extent.

Bonds: I like investment (not junk) grade bonds as a good way to beat CD yield rates. The bank is still useful for its FDIC insurance.

Lowering the cost of living: Replacing that fridge, washing machine, or gas furnace from the 1970’s can yield enough savings in utilities to pay for the appliance in several years. Utility and tax incentives help.

Pay down expensive debt: It’s a guaranteed savings. Invest the interest saved or have a little R&R.

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

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