Traditionally, investing in stocks has been associated with good times. People tend to invest in gold in times of economic crisis; and real estate investment has been considered relatively safe. When investing in stocks loses its luster, investors often react and turn to the other two investment options to make money and make up for losses in stocks. You should do the same?
Anyone who follows the stock market knows that there are bull and bear markets … good times and bad. If you invest in gold, you know the same is true there. The 2008-2009 recession reminded investors that real estate investing also has its ups and downs.
The good news is that historically these three investment options have not matched the same drummer. For example, in a bear market for stocks, real estate can perform well and / or gold can skyrocket. The experienced and truly smart investor tries to synchronize the markets so that they are in the right place at the right time.
Should you play this game? I suggest you don’t. There is an easier way to earn money by investing as an average investor. Playing in the markets is risky.
Let’s talk about the money you are willing to invest and put at risk to obtain a higher return in the long term. Break it up 4 ways: Domestic Stocks (US), Foreign Stocks, Real Estate, and Precious Metals (Gold).
Find a mutual fund company (family) that offers funds in all four categories; and decide how to divide your investment assets among these 4 investment options. This is called asset allocation. For example: 40% to national equity funds, 30% to foreign equity funds, 20% to a real estate fund and 10% to a gold fund.
Invest according to the asset allocation targets (say 40%, 30%, 20%, 10%) that you have chosen.
Over time these percentages will slip out of line as the 4 investment options will work differently. For example, stocks in general can suffer when real estate and gold perform well.
Instead of selling what appear to be your losers or trying to time the markets, simply rebalance your portfolio periodically. In other words, move the money back to the original asset allocation target percentages. In this way, you will automatically move money to investment options that have lost popularity and are selling at lower prices.
In addition, you will relax with the investments that have already made the highest returns. Remember, there are bull and bear markets in gold and real estate, as well as the stock market. Take advantage of them and earn money in the easiest way.
And it covers all the bases: investing in stocks, investing in real estate and gold.