My smart hubby (he doesn’t read this blog so I know I’m not just buttering him) said this 2 years ago but no one listened. Not even me when I rushed out to buy Google shares amid promises they’d hit 1000. So he found this for me to watch.
Watch all 5. Ok I confess I made it through 1 and 2 only but I got the idea. The world economy is a pack of dominoes, leveraging on money that doesn’t exist. The dominoes have begun to fall.
Basically, a serious recession is imminent. So keep cash, sit tight and wait for everything to crash. Then buy blue chip stocks and/or well-located properties.
If you have money in funds or worse, structured products, cash out. Those products may go bankrupt like Lehman Bros (et tu Lehman!) and you get nothing, plus don’t forget these guys charge you 2-7% a year service fee for investing your money badly.
5 years of badly managed funds can cost you an average of a 25% loss and that is not compounded, just my guestimate. So the alleged 8% yield (non-guaranteed of course) – in reality, more like 2.5% – is a joke.
2.5% – 5% = -2.5%
No wonder most funds lose their clients’ money. And that is during good times!
So cash out. At least now you get back your 50% (the other 50% lost now), which held and invested in blue chips or property, in 5-10 years, depending on recovery, you’ll make easily 80-90% (that’s a bet 30-40% gain anyhow).
Stocks and property are one-fee transactions (note: properties have annual taxes, and some have maintenance fees but that is worth the rental income plus capital appreciation). Charge when you buy and charge when you sell. No silly annual fees for doing nothing. And the beauty of being able to hold it till you’re ready to sell without worrying about compounding costs of simply holding it.
The market has fallen some 30-60% since last year and there’s still a good way to go. So spend less, save some money, and wait. Patience favours the wise investor.