We are really in a very interesting spot economically. Currently the opportunities abound to create wealth. Property prices are down, only starting to show some increase in price. Ideal time to buy bargains. World stock exchanges are on a knife edge. Every time I open my stock broker’s account it seems as if there is only one way – down. Interest rates are low. So how do you invest?

 My sister, who retires at the end of the year, asked me what I think she should do with her money. And I replied – Money Market! She needs an income and to protect the capital. Any investment where she can invest to get an income, will tie her in at a very low interest rate. Remember, government bonds are inversely directly correlated to the interest rate. In other words, if interest rates are low, the capital value is high. And vice versa. If you want to know more about this, download Investments and Investing, my FREE e-book under Free Stuff.

 It just does not make sense to tie up your money and income, at the bottom of the interest rate cycle.

 I am very scared of the stock market, at the moment. I think I mentioned it before, but in 1929 and 1969 (I was only alive in 1969, but to stupid to know anything) the real drop in the market came later. It was almost as if there was a detrimental blow that took the markets into ICU, then some improvement and then a final death spasm. I am afraid that history will repeat itself. That is why we need to hedge our stock market positions.

 The problem is, obviously a lot of my sister’s investments are in stock market related instruments with the major insurance companies. So there is a double whammy – interest rates are low AND her capital has lost a lot of value. It is not a good situation! And I don’t really have a solution! And it is not as if she can sit back and wait for a recovery!

 The tragedy in this case is – she encouraged me to buy my first property! She had a number of properties which she bought and sold. And the other day I thought about it and realised – if she kept ALL her properties, she would be making enough income for herself and me!

 Now she pays a hefty price for the mistakes of the past – perhaps it was not a mistake, but lack of knowledge and insight!

 

 

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