It seems like it's tough these days to find good, safe investments. Sure, the stock market is up right now, but over the years it's been and uphill battle for many of us to squeeze out some earnings. As a recent CNBC article noted, "Investors have had to navigate a market that for the last 13 years has delivered no real returns, according to Morgan Stanley's Greg Fleming."
But with safe investments paying hardly anything right now, it can leave you scratching your head at to where to park your money in an effort to realize any sort of gain.
Savings accounts and money market funds
Right now, most savings accounts -- even high-balance accounts -- and money market funds are offering little in the way of interest rates. And it doesn't look like such rates will be moving up any time soon. However, if they do, I would possibly consider certificates of deposit; however, there are options that I like even better than a CD paying two or three percent.
First off, I'm still a fan of government savings bonds, and I still believe that higher inflation due to the Fed's money printing is imminent. Therefore, I like series I (inflation based) savings bonds since they move with the rate of inflation but will never pay less than zero, and offer certain tax benefits as well.
I also like the idea of paying down debt. While I know that some people will give me a hard time for pushing this idea, especially when it comes to mortgages with their lower current rates, even just cutting payable debt with associated interest rates in the 3.5 to 4.5 percent range is akin to earning such rates on savings in other places.
The stock market
Personally, I feel that the stock market is a tough sell for the average working person. If we haven't been in there buying, selling, and taking gains, the road hasn't been exactly easy over the past decade. In fact, that recent CNBC article I mentioned earlier noted, ""The U.S. stock market is on almost everybody's list at the top of where people think the most opportunity will be in the next year. I don't disagree with that," Fleming said at the Delivering Alpha conference presented by CNBC and Institutional Investor. But, he added, if you invested $1 at the March 2000 peak "you would still have a dollar.""
I find this a fairly true statement in my experience, since I've just broken even on my own IRA compared to pre-2008 levels. After the financial crisis, to combat the stock market's up/down stagnation, I moved my retirement savings into a dividend reinvestment fund -- or DRIP. In this way, I can allow my money to continue to move with the flows of the market while also earning a monthly dividend (that yields about 6 percent annually) that is currently reinvested, continuing to increase my share total in the fund.
Like many homeowners, we lost a boatload of money in the housing market collapse. The value dropped dramatically and we ended up selling a home we had purchased for almost $300,000 for $230,000. However, we turned our loss into an opportunity by selling and downsizing to a home that we could afford outright, thereby eliminating the need for a mortgage and the tens of thousands of dollars in associated interest.
Our focus now has shifted again though. As we look to become more self-sufficient, we are now considering a future home with land. Through such a move we hope to accomplish several things. First off, we'd like to reduce our property tax rate. And second, we'd like to begin a life in which we are able to produce our own materials for things like wood and stone for building supplies, food for our family to eat and possibly even sell, entertainment through doing things on our land rather than paying to go places, and even provide fuel for heating our home through our land's timber. In this way, we hope to turn our home not into just a place to live, but a place that provides for our family, cuts costs, and maybe even earns money.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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