Most of us know where to invest money in memories, but when it looks like the sky might be falling, knowing where you can invest money and how exactly to invest it becomes a puzzle. In 2014 and 2015 good investments might be hard to find, especially if yesterday’s good investments like stocks and bonds tank. This is not a prediction, but instead a “heads up.” You can’t prepare if you’re unaware, so let’s take a closer look at the sky.
Everybody knows that safe choices like money market funds and bank savings accounts don’t appear to be good investments for 2014 because they pay peanuts. Binomo But imagine if the sky starts falling: either interest levels ignite and/or the currency markets tanks? In any event or both… where you can invest money may be the question of your day. Safe choices will look like good investments for parking money that must be safe.
Wall Street’s traditional answer to where to invest money: put about 60% into stocks with about 40% in bonds holding a cash reserve on the sidelines. Problem: in 2014 and 2015 losses in stocks may not be offset by gains in bonds… as was the case for the last 30 years roughly. If interest rates soar from today’s record-low levels, neither stocks nor bonds appear to be good investments.
For over 30 years interest rates were falling and bonds were generally good investments. With today’s ridiculously low rates (created by our government to stimulate the economy) a rebound in interest levels is in the cards (because the government unwinds its stimulus). When that happens, bonds will no longer be where to invest money for higher interest income with relative safety. Bonds are NOT good investments when rates go up; they lose money. That is the way it works. How exactly to invest in bonds in 2014 and 2015 if rates take off: lighten up and choose safety.
Stocks had been excellent investments five years running as the year 2014 began. This is at least in part because of government stimulus and cheap money. In a way, stocks were where you can invest money because nothing looked cheap except for money (short term interest levels were set at about one-tenth of one percent). With an increase of over 150% in five years, the downside risk in the currency markets is mounting. This begs the question of how exactly to invest money in stocks if the sky starts to check ominous.
Remember that the currency markets is actually a market of stocks, which means that almost all stocks get hit when the market crumbles – but at least a few will undoubtedly be good investments. And the ultimate way to find good investments in a negative market is to watch the purchase price action. For example, because the market climbed 30% in 2013, some gold stocks were down about 50% by early 2014. Unless you know how to invest in or how to pick a specific gold stock… you might want to know where to invest money to get a piece of this action. The answer is to invest profit gold funds and let them pick the gold stocks for you.
The bottom line is that in 2014 and 2015 investors face an uphill battle, because both stocks and bonds look pricey. That displays a fresh challenge to today’s investor in search of where to invest money. We have been facing uncharted waters in this modern electronic world, where no one really knows how exactly to invest or how to locate good investments for the future. This includes the big investors like life insurance companies and pension funds.
My suggestion would be to take some profits in your stocks and bonds, as the tide will turn eventually if not in 2014 or 2015. Then you’ll have cash reserve, so that you can make use of the situation as the skies darkens. Smart investors are always searching for where you can invest money next, especially when a big change of trend is in the cards. At such times, yesterday’s underperforming sectors or industries often become today’s good investments.