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| Investments |
- Use For Long Term Goals that are about 7 years or more in future
- Choose financial instruments with long term returns that are greater than guaranteed rates
- Instruments with high short term risks but low long term risks
- Well Balanced Stock Portfolio
- Well Balanced Bond Portfolio
- Quality real estate in growing geographic areas that you are quite famiilar with which could be:
- Your own home or homes
- Individual rental properties which you actively or passively manage alone or with partners
- Real Estate Investment Trust (REIT)
- Mutual funds - again
- Stocks
- Bonds
- Indexes
- ETF's, etc.
- These Â?investmentsÂ? have the potential for great gains but also for debilitating losses; these are for pros, not amateurs
- Stocks of:
- New ideas in: high tech, biotech, internet, energy
- Copycat businesses
- Hurry-buy-me-now-before-its-too late
- Bankrupt businesses at pennies on the dollar
- Â?I have some secret newsÂ? (that everyone else also has)
- Junk bonds - high interest with equally high risks for non-payment
- Precious metal & natural resource commodities
- Stock Options
- Crop & farm futures
- Foreign currencies
- Derivatives (if you have to ask, you probably donÂ?t want to invest in them)
- Creating A Well Balanced Portfolio
- These are not absolutes but are a good guide for conservative, safety minded investors
- No Two Portfolios will look the same, they will vary based on
- Time period in which funds must be accessed
- Tolerance for risk
- A rough guide for how to balance stocks/riskier investments vs. bonds/cash instruments is the Rule of 100
- Stock/High risk % = 100-your age
- Bonds/Cash% = your age
- Some people balance yearly, some every 5 or 10 years. If you chose to rebalance, remember:
- Be consistent regardless if the markets are up or down.
- You can buy more good priced stocks when the market is down
- Mutual Funds: Keep it Simple
- Buy only ONE of each TYPE of fund:
- DOMESTIC stock fund - choose the type based on your investing style
- Conservative - watch & hold
- Income
- Income & Growth
- Whole market (not industry specific) index funds
- Moderate
- INTERNATIONAL stock fund
- BOND fund
- Owning multiple funds of the same type do not truly give you much more diversity because similar funds own many of the same stocks as each other
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