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Best Investment Strategies - Strategies That Will Yield the Most Benefit for You
Is there a foolproof strategic formula for investing for the future? Of course not. Although most investors find a common ground and consistently play strategies which have been favorable in the past. I like parables! A good friend and his father decided to convert their wheat farming operation to a cattle grazing operating business, all the wheat went to pasture, yearlings were bought, to retain and fatten to sell to a "finisher", feed lot, to bring them to slaughter. The holes in this procedure are glaring, no control of the cost of yearlings, food cost, weather, daily gain, timing to hit the right time to sell. In short to many variables. Grandpa, having tried this before, stated it was going to be very difficult! As luck would have it all factors came to pass, the cattle were sold, and a great windfall of profit was gained. Grandpa said, " Boys, you better take your profit and enjoy it, because you will never do it again!" Of course fueled by the heady breeze up there, they doubled down... for many years, and many times. Never regained that level of profit, in fact lost enough that land liquidation to reduce debt was necessary to survive. The moral is of course, be careful for what you wish for. First attempt or early phenomenal gain might delude us to believe it is routine rather than the aberration which it was. Convince us to try high flyer stocks, or the new flavor of the month, to attempt to repeat those heady days! If we are lucky, we will have some winners, which will offset the many losers. I did some research and found out that the best "blue sky" hedge funds, return around 3% to the investor annually. The current stock market with its high share value, by knowing the Newton theory, that all action is met by equal reaction, we may be on a collision course. In history, a reaction to plus gains, might mean loss of equity value, for some time, meaning we stood in space without earnings for that time frame. Will these stock over time regain vitality? I do believe so, but you need to have that time frame to overcome the immediate foreseeable crisis.
My theory is not to discourage you or dissuade you from taking "high flyer" risks. I would however, concern my self with where you are currently in life. This includes both earnings, age, outside obligations which place immediate or contingent demands on cash flow. In the investment capital, I would guesstimate percentages for the risky "high flyers", and percentages for staid investments, depending on your lifestyle evaluation. I like private investment, for stable, reliable investments, but I don't think either should be all you invest in. Private debt based business loans, will get you a better rate, than C.D.'s, treasury securities or swap rate investment, in the 3.50% to 4.25%, amortization of 1-10 years. Private debt equity is not guaranteed, however, the loan equity value usually in the neighborhood of 50%-70% loan to value, is quite a bit of security to the first mortgage investor. Safeguards include the cash flow requirement, most private lenders will require cash flow of 2.50 percent of debt coverage, in the property, annually. Will insist on creditor debt limits, bankruptcy remote safeguards, and a solid exit strategy. Some are monthly income, allowing interest repayment immediately for living expenses or other investments. Though I would not encourage any investor with eyes wide open, not to take any risk, After all, it's the spice of life. It should matter to a lot of investors to have a dependable base of investment, to rely on, while waiting for the "flyers". As a banker we had another parable, "The borrower who owes the bank, a hundred thousand and can't pay, this borrower has a problem! The borrower who owes the bank one million dollars, and can't pay, well the bank(er) has the problem!" Don't break the bank! With private investment, smaller investment amounts some as low as $5000.00 can allow for diversity, and personal hedge in your portfolio.
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