I use to save a part of my profits for retirement/medic expenses, and so on... I used to save in the form of cash, but converted half of my account in high yielding stocks(hotels,...) after 9/11. In the meantime, I had to use the cash to buy property but I'm now wondering wether, since I'm still young, I should direct my savings to stocks or continue to save in cash or gvt bonds. (or even smthg else like gold or pure compounding) What would you do ? OHLC
why not high yielding beaten down preferred stocks like AES_pc and MIR_pa? You can short the underlying common to lock in the yield.
Whats wrong with mutual funds if you dont have any knowledge of the stock market, you can dollar cost average into a good mutual fund. Vanguard has low expenses. If your young I would think this would be a good idea. You can put any amount monthly into a fund, say for example the S&P 500 fund $100 per month, it adds up over say a 30 year period of time. Bogle has a book you can read about that. There are also Dividend Reinvestment Programs from many companies, you buy some shares and allow the dividends to be plowed back into purchasing more shares of that company.
theres a book i read, i think it's called "investment risk in the garden of eden". it details how to invest based on your goals, so you don't lose... basically for savings, I would do 1/5 cash, 1/5 Grade AAA goverment bonds, 1/5 gold, 1/5 stocks, 1/5 realestate... the gold and realestate are your insurance against a meltdown... i'd get realestate somewhere in the country, and hide your gold there. For the stocks, during this bear market... i'd buy stocks you like... then sell calls on them and collect the premium everytime they expire. If they expire worthless, u still get the stock, if they expire in the money, you lose the stock, but have all your investment plus the premium on options. Once the bear is over, then stop selling options, and just hold the stock. for bonds, i'd do the long term ones... and you could even do some grade AAA stock bonds for a better return.
Without knowing much about you, I have found that it is hard to go wrong tucking away 10-20% of your income each month. The above book is one of the best at laying out this idea in an inspiring format. When people call me and say what should I do with this, I lie and take the other side of their trades just like Merrill. Other than that keep 3-6 month income in the bank or something close like short term cds. Make sure your insurance is in order, health, disability, life if you have kids. No sense losing everything to a freak accident. Next look to Cocaine for quick cash generation. Invest the proceeds in several different buckets. Vanguard is good, ETFs are good, Hard Assets like Real Estate and Gold are good. Bonds are good. Don't be a piggy piggy will all of it, but small well placed speculation can pay off from time to time. And when you see your ideas on CNBC or FOX then it is time to start selling to the (M)asses.