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safe investments in this uncertain economy?


ch3wbacca1991

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Whats a good/safe place to keep my money/investment in? (there has been little talk of this before in previous threads)

 

Its seems like I am actually losing money when I keep it in the bank because of inflation. Say I keep 100 bucks in the bank for 2 years and get 103 bucks back But the price of gas, food, tuition etc has gone un proportionally up.... Hence I am actually losing money by not spending it now...

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Id rather not put a limit because that will exclude vancouver real estate... Thanks.

 

Well if I were you I would put it in some Apple stocks before the iPhone 5 comes out. If you look at the trends from the past 5 years you can see that a 20% spike occurs EVERYTIME a new cellular device comes out. In fact, I made a bit more than 20% for the iphone 4S.

 

Other than that, natural gas has been hitting all time lows due to a new and more efficient FRAC-ing technology. I've been putting some cash on that.

 

Oil is also quite low right now, soooo of course I'm capitalizing on that as well =)

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Not many people in med/residency are in a position to invest large sums of money as they have large lines of credit to pay off.

 

If you have extra money, number one is to pay off as much debt as possible. Saving the interest on even the lowest interest debt at 3% (current prime rate for med student LOCs) is better than inflation. Have extra/emergency money usually doesn't make sense since the LOC is revolving (if you have unforeseen expenses you can go back on the LOC).

 

If you have no debt and still have some extra money, remember that risk is proportional to return. High-interest savings accounts right now are paying 1/2-2/3 of inflation. But if you are saving for tuition, or a down payment on a house, etc, better to keep that money safe and relatively liquid.

 

If you have no short-term savings goals and can afford a bit less liquidity, laddered CDs are an option - the idea being that each year you put 1/5 of your savings into a 5 year CD - so that each year one matures and you can buy another or use that money if you need it. The idea being that you average the interest rates so if rates change dramatically from year to year you at least have your hands in all the pots. Bonds (federal, provincial, or municipal) are another option but they generally have lower interest rates than bank CDs.

 

If you are looking for higher return, higher risk options there are lots of options. ETFs, mutual funds (which in turn can be invested in bonds and/or equities), equities (dividend vs. non-dividend), limited partnerships, real estate - the possibilities are nearly endless and depend on your capital. If you in this category you should probably seek some counsel from a financial advisor.

 

"Playing" the market as suggested above wrt Apple, oil, natural gas etc is just that - playing, not much different from gambling. Doesn't make it wrong, just be aware that the potential returns are large, as are the risks. Don't put money you can't afford to lose into that kind of thing.

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Whats a good/safe place to keep my money/investment in? (there has been little talk of this before in previous threads)

 

Its seems like I am actually losing money when I keep it in the bank because of inflation. Say I keep 100 bucks in the bank for 2 years and get 103 bucks back But the price of gas, food, tuition etc has gone un proportionally up.... Hence I am actually losing money by not spending it now...

 

Well, if you spend, you will have zero. So, by not spending you have money, perhaps losing in purchasing power, but at least, you are preserving capital.

 

Equities are volatile in these economic times. When someone sneezes in Greece or Spain, it affects the market here in Canada.

 

As for bonds, they are at all time lows. So, if you were to buy bonds, and the interest rates go up, you will loose capital as capital will react inversely to the interest rates.

 

There are some excellent REITs, real estate investment trusts, for example in apartment buildings in various cities in Ontario. They provide excellent, safe returns on a monthly basis and as the apartment buldings increase in value, you also have the ability to make capital gains. I know of one such investment that 3months ago provided a steady 8% return payabvle monthly and has provided a capital gains return of 10% in less than 3 months. However, this investment requires a minimum investment of $150,000 and this is locked in for 12 months, thereafter you can redeem on 30 days notice.

 

I know of another excellent and safe investment in Ontario that provides an 8%return (without possibility of capital gains) that also requires a minimum investment of $150,000 and this is locked in for 12 months, thereafter you can redeem on 30 days notice.

 

Having $1,000, $10,000, $50,000 won't cut it. For small sums of money relatively speaking, if you want a haven with minimal risk, you are talking money market. Even gold is risky and not a safe haven.

 

Certainly when we become physicians and pay off our LOC, those of us who understand risk tolerance and have common sense, good judgment and a long time horizon can make investment decisions planning for our longterm financial futures and eventual retirement. The idea is that as we will be working very hard for our money, one day our money will work hard for us. :P

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Any thoughts on human emotion in the area of investing? E.g. prices go up everyone wants to get in. Prices go down lots of people lose confidence and bail... So I assume its a very bad idea to invest in something with human emotion?

 

Human emotions do affect the market. When people are pessimistic, there will be more sellers than buyers and prices decline. So, you got it.

 

Better to be a contrarian and buy against the market as you will find opportunities and when the market rises due to increased confidence, that is the time to take your profit.

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i think the safest investment you could ever make is real estate. Because no matter how much property values may go down as people keep saying, the way I see it...they are bound to go up. THEY WILL GO UP. It may not be right away...it may be in 2 years, in 5 years, in 10 years....but in the end...it WILL go up thats just the way the world works (unless you buy in a 'bad local' or you get the bad luck of your property ending up as part of the 'bad part of town' in 10 years :P - but then again opposite is true...you could get realllll luckky and end up buying in the 'pricy neighborhood' of tomorrow ;))

 

but yah, in my opinion, assuming you have big cash then the best investment is real estate...not only long run but also short term (the cash you make every month from rentals!)

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I know doctors who bought new townhouses down south for less than half normal market value. The properties are beautiful and are a good investment, which was possible due to the housing/mortgage crisis in the US. They n vacation there and will sell the properties in about 10 years when values increase.

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buy land/property/house. Wherever you are, assuming you're not trying to buy something north of 60.

 

It's probably too late to cash in on gold, since the price is several times what it was in the 80s and 90s. Next best thing is another precious metal or mineral.

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this might sound silly and it's purely speculative but why not investing in... water?

 

we have the #1 world supply of water, this is the most single vital good one needs to have and yet we are purely wasting it when we could make billions just by taxing it...

 

http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171644581795

 

figures 3 and 4 show steady and slow increase of revenue, but every projections (WHO among other) demonstrates that this good we consider granted may become less available around the world in few decades... meaning exponential revenue

 

I don't have any specific corporations in mind for investments but one may consider this field when investing imho.

 

just my 2 cents

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this might sound silly and it's purely speculative but why not investing in... water?

 

we have the #1 world supply of water, this is the most single vital good one needs to have and yet we are purely wasting it when we could make billions just by taxing it...

 

http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1171644581795

 

figures 3 and 4 show steady and slow increase of revenue, but every projections (WHO among other) demonstrates that this good we consider granted may become less available around the world in few decades... meaning exponential revenue

 

I don't have any specific corporations in mind for investments but one may consider this field when investing imho.

 

just my 2 cents

 

Aquafina!!!

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