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Initial post: Apr 18, 2009 7:00:09 AM PDT
Jon G says:
What in your opinion is the best place for wealth creation today given this political environment? When do you believe the economy will be in the black again? What do you have your money in?

I am apprehensive about the first question and am looking forward to any intelligent ideas of investment. I made some money when the banks where near the floor because I knew they were being so low on fears of nationalization. I think the economy will begin growing again late 09 to mid 10. I don't have any particular proof of that it is just my educated guess. I'd be interested in hearing any other thoughts about when it will be on track again. I'm sitting on most of my cash and have probably a quarter invested in broad market funds DIA AGG type stuff. Any suggestions? Anyone making money out there?

In reply to an earlier post on Apr 20, 2009 1:30:40 PM PDT
Last edited by the author on Apr 20, 2009 2:48:32 PM PDT
Bonds have outperformed stocks over long periods of time, and right now we may be in a good 15 year run when that happens. Seems like a silly rule, but buying your age in bonds has worked very well for our financial planning clients over the long term. Most investors (led by emotional 'experts' on cable tv shows) have been walking past the steady returns of bonds for too long a time. Corporate bonds look pretty good right now. Municipal bonds are usually good but currently we don't know if the municipalities will be able to raise taxes enough to cover all their general obligation bonds, so we are cautious on that front.

On the equities front, buy a very well diversified (and low cost) portfolio, including at least 15-20% small caps, because they generally respond first in a recovering economy.

Posted on Apr 20, 2009 4:39:12 PM PDT
Last edited by the author on Apr 20, 2009 4:40:51 PM PDT
The only thing that's showing a profit for me is my GNMA fund at Vanguard. 4.40% yield for the admiral fund as of 04/20/09.
I also found the above information by C.A. Hoffman very interesting.

Posted on Apr 24, 2009 1:58:35 AM PDT
Mostlee says:
I would agree with bonds (safe and not going down like most others).

Posted on May 5, 2009 5:44:48 AM PDT
R. Robinson says:
the Fed will find a way to show how the economy has grown in the near future. Just like the way employment numbers have been altered. If we used the same method as used in 30's are unemployment rate would be at least 20%.

Posted on May 6, 2009 3:56:38 PM PDT
I'm an investment advisor in Virginia and would recommend that you not attempt to time this market. Investing in equities should be for the long term (at least seven or more years) and you should have a portion of your portfolio in equities. It sounds like you are familiar with ETFs(exchange traded funds) like DIA, IJH, IJR, EFA and EEM. These five ETFs provide exposure to Large, Mid, and Small size US companies and exposure to the broad international markets plus emerging markets. Decide what portion of your portfolio should be in equities and gradually, over the next year, invest until you have an appropriate percentage in equities. A good investment advisor or financial planner, I don't recommend brokers, can help you determine the right mix for your specific situation.

I do not currently recommend heavily investing in bonds. Like equities, you should have exposure to bonds in your portfolio. They may even be a majority of your portfolio, but I would not expect them to outperform stocks over the long-term. They did over the past decade, but that rarely happens. Bonds do offer income and more stability than equities. Among other factors, bond prices are primarily based on credit quality, time to maturity, and changes in interest rates. As interest rates fall, bond prices generally increase. We have seen this over the past few years. Unless you believe interest rates will continue to fall, I would be very careful in the bond segment. The Vanguard GNMA fund that Amazon Shopper mentioned is a very good fund, in my opinion. GNMA's do not react to changes in interest rates as much as other types of bonds and bond funds. Depending on your tax bracket, you might consider short to intermediate term high quality munis or TIPS. In any event, continue investing in bonds, but be careful in this environment. Bonds can lose money and bond funds cannot be held until maturity, since funds don't mature.

I recently wrote a book and it is now available on Amazon. If you have fears relating to investing, Investiphobia - You Can Invest Without Fear, may be helpful to you. It is not a "how to" book, rather it addresses the fears that prevent investors from making sound investment decisions. It also provides a detailed look at the types of financial professionals you may encounter and provides guidance in the selection of your advisor. It is not an advertisement for my firm, which only serves Virginia residents. Rather, it is a book about the fears that I have seen over a twenty year career and the damage that these fears can cause to an investment portfolio. If you are looking for a "how to" book, you might consider William Bernsteins, The Four Pillars of Investing. He addresses your question in great detail.

Best of success to you in your investing, and more importantly, in your life.

Posted on May 6, 2009 5:15:52 PM PDT
Investiphobia - describes me to a tee.
I just ordered your book.

In reply to an earlier post on May 7, 2009 6:05:10 AM PDT
Thanks! Let me know what you think, I intentionally kept the book relatively short and kept the investment lingo to a minimum. Not to insult my readers, but to make the book flow. Shoot me an email after you read the book or feel free to review it, positive or negative, on Amazon. For other books that I recommend for investors, check out my website at www.investiphobia.net. The site also will soon have free downloads of forms from the book and links to resources for investors who want to check out their advisor and make sure they are who they say they are! That's always been important, possibly never as much as it is now. Best regards, Paul

In reply to an earlier post on Jul 7, 2009 10:14:54 AM PDT
I am a real dummie. What bonds would you buy at this moment?
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Discussion in:  Finance forum
Participants:  7
Total posts:  9
Initial post:  Apr 18, 2009
Latest post:  Jul 7, 2009

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