In the last month, the stock market as a whole has fallen over 11%. Since the plunge, everyone has been on pins and needles, wondering if the market will recover or whether it will dive even deeper into the abyss. Unfortunately, I don’t have the answer – nobody does – but it has long since been speculated that 2016 would be a disastrous year for stock investing, and that’s looking more and more true every day.
Where to Invest Your Money in 2016
If the stock market is going to crash again in 2016, where should you be putting your hard-earned money? At this point, I’m certainly not jumping at the opportunity to buy up shares of the Dow or the S&P 500. Each day, the value of these indexes swing wildly up and down and show no solid ground. An investment here seems more like a gamble than it does a wise choice for the future.
If the “smart thing” is no longer the way to go, where on earth should be we be investing our money? This is what Liz and I have been asking ourselves since our engagement early in the year.
1) Real Estate
This one shouldn’t be a big shocker to you. If investing in the stock market isn’t safe, then putting your money into a tangible asset should be the way to go. The only problem is, the real estate market is incredibly hot right now and houses are selling over list price just a few days after going up for sale.
Ideally, Liz and I would like to buy a house that has a solid structure, but some ugly wallpaper and paint. We’ll spend a month or two to fix it up, and then we’ll rent it out for a passive monthly income. We’ve been looking for a single family home for about 3 weeks and have found absolutely nothing that we consider a deal. While real estate has always been a solid investment, if the upfront costs are too high, then the overall investment picture just doesn’t make sense.
If you can’t buy into real estate at the right price, where else could you invest your money?
where to invest your money
2) In Yourself
Sitting in bed last night I asked Liz, “What if we can’t find a deal on a rental property? Should we just keep building up cash and wait?” It seems strange that when we finally have the money to invest heavily, there really isn’t anything worthwhile to invest in. What we could do in the meantime though is invest in ourselves. In other words, while we wait for that steal of a deal on a house, we could be investing in real estate seminars, into books and CDs, and taking a few gurus out to breakfast. This way, we’ll be ready when the right moment presents itself.
Investing in yourself could also mean improving your formal education. Have you considered going back to school to finish your degree, but you just haven’t pulled the trigger yet? If, by spending $20,000 today, you could potentially earn yourself $10,000 more dollars each year for the rest of your life, that would be a good thing to do, right? So why not dive in and finish that education? When the typical investments aren’t ripe for the picking, then at least invest in your future earning power!
Finally, investing in yourself could include starting your own business. I currently earn a few pennies with this website, but it hasn’t been very scale-able. In other words, if I put in double the efforts, would I experience double the income? Nope, I haven’t seen it yet. If Liz and I want to earn a return on our money, it would be wise for us to explore a wide variety of at-home businesses. Maybe we could build a greenhouse today to earn future profits on flowers and produce, or perhaps we could build onto our garage and create our very own rental suite? There are so many possibilities out there – you just have to alter your investment mentality a bit and consider investing in yourself.
3) High-Yield Savings
Cash does absolutely no good when it just sits there earning nothing. Every year, the cost of living goes up, so if you don’t earn any money with your existing savings, then you’re actually going backwards. In other words, stuffing money under the mattress is just a flat-out bad idea. So, if you can’t invest your money in the stock market, you can’t find any real estate buys, and you’re not interested in investing in yourself, then what should you do?
Some put their money into government treasury bonds that earn 2% annually, but that definitely isn’t without risk either (note the recent government shut-downs when they hit their debt ceiling). So what seems to be safe, but still earns a decent return? Believe it or not, I point people to high-yield checking accounts at their local credit unions. About four years ago, I found a credit union near my home that paid out 3% interest on my checking account. They’ve never missed a payment and I pretty much do nothing to earn it. It’s a beautiful thing.
where to invest your money
Collectibles are another way to go if you’re looking to invest your money somewhere other than the stock market. This could range anywhere from a baseball signed by Babe Ruth to a painting crafted by Picasso. Pretty much anything that can be authenticated and is one of a kind would be labeled as a collectible in my book. If you foresee a rise in popularity for a particular item, then seek out that item and buy it! If you’re right, then you can sell it years later for a hefty profit. This category definitely isn’t for everyone (including me!), but there are definitely advantages to investing in collectibles.
5) Precious Metals
In theory, there is a finite amount of precious metals in this world today (after all, no one has yet figured out the exact science behind alchemy), which means that their value can be based on the rarity of the metal, it’s usefulness, and it’s demand among the masses. Today, some of the most popular metals are silver and gold, and these items are revalued every minute of every day.
As a general practice, if one believes that the stock market will soon take a dive, then an investor will move the majority of his/her money into precious metals, believing that when the market goes down, the demand for precious metals will go up, thus increasing the price. It definitely not a bad plan. I will likely invest in precious metals in the near future. But, instead of investing in a silver stock or gold stock, I’m going to invest in the real deal. It’s just a safer way to invest when you’re actually holding onto real property.