Wednesday, February 1, 2012

Where Should I Put My Money This Year?

With interest rates set to stay low until 2014, safe havens like CDs and Treasuries do not offer much returns.  It is almost the same as leaving your money under the mattress.  With inflation estimated to stay at 2.00% some may argue that a 1% interest paying CD is not too bad.  For baby boomers and risk averse individuals CDs and bonds may be a choice they can comfortably sleep with at night.  But for the younger crowd and those who want to earn some gains stocks do seem fairly attractive.

With interest rates low, now is a good time to buy high yielding dividend paying stocks, this is true even for the older retiring crowd.  Older people know this they usually invest in utilities and blue chips.  In this environment with the European crisis and the S&P downgrading at will dividend paying stocks seem like a good alternative offering capital gains for the coming years and higher dividends as we fight the weather.  Stock volume has been lower since investors remain concerned with the economy and job market so they have taken money out of stocks and mutual funds.  If this slow economy gets a bit rough and stocks go lower well then taking some risk that didn't get rewarded right away would be the least of our concerns.  I would keep an eye out and adjust my position if I were not able to sleep at night.  That is why it is good to only invest amounts that make us feel comfortable.

Gold has shot up since the fed announced that rates will stay low for the next few years, this also sent the dollar lower and the euro higher.  People have been stocking up on gold, silver and other precious metals.  Although gold coins are popular as a way to hedge against the weak dollar, ETFs and gold future contracts are another form of speculating and trading the news. 

For those with a little more cash and good credit buying a home may be a good way to invest for the long term.  A large amount of Americans have most of their net worth linked to the value of their home.  With mortgage rates at 3.88% for the 30 year fixed and 3.19% for the 15 year fixed buying a home now seems to be a good strategy especially for young adults.  Sure the housing market is still bottoming out and not going to shoot up anytime soon but for those with time to wait this is an alternative to stocks and bonds.  With that said if you don't have good credit and a 20% down payment don't even think about it stick to other forms of investing.  Owning a home is a big responsibility and should be planned for appropriately. 

Finally for those concerned with risk and only feeling safe with a 9-5 job playing the lottery is always an option.


  1. Well, certainly not in properties and real estate, because that's plain cruel now at this point. And inadvisable; last time this was contemplated, it led to the 2009 Financial Crisis. This may be a wake-up call as well; a stark, yet welcome, reminder that maybe we should stop looking at investments in terms of minerals and inanimate objects. Rather, we should start looking it in terms of social merit and our overall welfare. Short answer: sustainable investments.