I have to ask you where are you putting your money?
Banks – no point
Stocks – you will lose
Alternative investments – do not understand it
Under the mattress – not a bad idea!
But seriously though where can you put it? If you have to put it anywhere bear these 2 type of asset classes:
- depreciating assets
- appreciating assets
Avoid type 1 at all costs. Assets that depreciate are cars (apart from vintage cars if you know what you are doing), consumable goods etc. anything that you buy and is worth less over time is a depreciating asset.
Steer yourself to type 2 as much as you can. Appreciating assets are things like Damian Hurst artwork, Fixed rate bonds with a rate greater than the inflation rate AAAAAAAAAANNNNNNNDDDDDDDD:
If you understand property then not only have you chosen an asset class that you understand it also appreciates!
Now before you all say property prices are falling. Yes that is correct. But in the medium term they ALWAYS rise. The only thing that can kill this assumption is if we hit deflation. Deflation I think will not occur. If you fear deflation then stay out of the game. Keep your money under your mattress.
If you understand property (it is not that difficult as we all grew up in one!) then I think this is the safest place to put your money. If you have enough cash to buy a property for cash then your risk is basically nil. Since you have no borrowing costs it does not matter if the tenant pays the rent! If they do then it is all profit.
If however you are the risk seeking type (like me) then you can borrow up to 100% of the purchase price (and more sometimes) and make sure the rent comes in then you make money out of nothing. Not bad eh?
So as everyone else heads for the bunkers all the people that can see the bigger picture come out to play and try to buy big time at knock down prices.
What are you doing?
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