Which is a better investment idea? Real estate investment vs stock market
Invest OverseasThe world’s top 10 property investment markets for 2020.This is the best time in your lifetime to invest in global real estate. This free report shows you how.Learn More
When playing the game Monopoly there is almost always a player who chooses to stay on his money in the beginning. At first it seems like a nice strategy. Every time when 'Start' is passed, this player sees his capital grow.
This strategy goes well until others start buying houses and hotels. All of a sudden, rent must be paid everywhere. For the player who stayed on his money, the inevitable bankruptcy does not follow much later.
In real life it is not entirely true that a person ultimately owns everything, and all others do nothing at all. But in real life too it is true that those who invest their money in assets that raise money themselves (shares for example) are ultimately far better off than those who stay on their money and do not invest.
How do you win?
How do you win with Monopoly? Buy as many properties as possible. And preferably the orange and red streets because they have the highest expected return. Well considered are the value shares of the Monopoly game!
And nice to know: the very most expensive streets - Kalverstraat and Leidschestraat - do not turn out to be such attractive streets to buy. Compare them with the most beloved shares of the moment, the expected return is actually not good at all.
The game Monopoly can not be compared completely to real life, of course. But in real life there is certainly a strategy to become rich:
1) Always live under your stand so that there is money to invest;
2) Invest the saved money in assets that raise money yourself.
As with Monopoly, it is virtually impossible in real life to save yourself richly. Conversely, it is virtually impossible not to become rich when, for a few decades, both items are held above. A significantly shorter period is often sufficient to become 'just' financially independent ...
Read the book “Fail-Safe Investing, lifelong Financial Safety in 30 Minutes” by Harry Browne.
Basic principle is
25% of your savings goes to stock
25% of your savings goes to precious methals
25% of your savings goes to obligations
25% of your savings goes to cash
Every year you rebalance so that what is to big becomes 25% again and what is to small is 25% again.
Let us say that your stock-portfolio is only 20% of your portfolio and cash is 30% you take cash and buy stocks, so you have again 25% - 25%
For stocks I use always the same system:
The rest of the answer I have written for other topics and is “copy-past”. So you have to “translate” it to your question.
The most important lesson you will have to learn is that time will be your only friend in the stock market. Do not turn your back to your only friend by getting impatient.
Stay away from pennystocks or, if you buy a pennystock, act as if you buy a lot from the lottery. Your money is lost in 99.9% of the cases.
You will have to learn many lessons and that could hurt you a lot. Over the years I have developed a technique of investing that makes that pain small enough to stay in the stock market for the rest of your live. I will tell you that technique.
For everything that can loose all its value, I invest no more than $500. I bought recently a stock for $150 including al costs.
When the price go down, I will never sell. I do not take losses, until that stock goes to zero. If the price goes up, 10% of 15%, I will sell 90% of my stocks and keep 10% of the stocks as free stocks.
I bought 450 Lightwave Logic for €473 (I leave in Belgium and I give you examples of what I actual did, so the price is in euro) after transaction costs. I did that in october 2012.
I did not recieve dividend. Until 2017 the price stayed under my buyingprice. In may 2017 I sold 340 stocks and recieved €435 on my bancaccount. So I have 115 stocks left for €38 or close to zero.
For precious methals I have two methods. First of all I buy the stock CEF. That is the only stock I know that represent PHYSICAL gold and silver
Secondly: Another advice I always give is to buy each month 1 ounce of PHYSICAL silver and keep it until the day you retire. In the long run you will have profits. You will not easily sell the silver for other purposes (very important), so you will have your own retirement capital, even if it is a relatively small sum of money. If you are 20 years of age, you have lived for 240 month and you should have 240 ounces of physical silver. One ounce of silver cost now more or less $20, so you should not feel the buy in your budget, even if you have to buy two ounces for the next 240 month, because you start to late with that idea.
Make it for my part 10 ounces of silver per month you have lived or 1 or more ounce gold. I give you the principle technique I use myself.
For obligations I would prefer funding circles or an other crowd LENDING firm.
I invest every month €100 in one loan of the category A and B. I never go for category C and hygher because they are to insecure. You should make it a priority not to loose money on those loans, so you should choose for the save categorys as well.
Go for many loans, so your risk for problems go down there to.