How to Break the Shackles of the Financial Industry
1. | Stocks – I have several stock portfolios. The lion’s share (maybe 80% to 90%) of my stock money is in what you might call “legacy” stocks – a handful of big, dividend-giving companies that I’m happy to keep on a “forever” basis. A smaller percentage is in dividend-giving companies with growth potential. And a tiny percentage are speculations – stocks I’m sure I’ll lose all my money on, but that I want to own just for fun. |
2. | Fixed Income – Historically, bonds make up this asset class. At one time, bonds (AAA-rated municipal bonds) represented as much as 40% of my net worth. My strategy was always to hold until maturity and buy them in “ladders,” replacing them when they matured. But I haven’t bought them since the rates dropped below 4.5%. Today, they represent about 5% of my net investible wealth. |
3. | Direct Investments in Entrepreneurial Businesses – This investment class has given me by far the best results. If you do this right, you can expect terrific, steady income and the potential for tremendous growth. The trick here is to invest only in companies you understand and have some control over. |
4. | Rental Real Estate – Next to business ventures, income-producing property investments have been the largest contributor to my success. I invest for the income and see appreciation as a bonus. Most mainstream real estate advice is bad. But if you do it properly – focusing on income – this asset class will do huge work for your portfolio. |
5. | Chaos Hedges – This asset class is not an investment. It is, as the name implies, protection from times of turbulence – a market crash, bankruptcy, lawsuits, etc. In this class, I include gold, silver, and platinum coins (bullion and one or two “rare” types). I bought all I needed when gold was trading at about $400 an ounce. |
6. | Collectibles – My preferred collectibles are fine art and first-edition books, but you can invest in anything from baseball cards to vintage cars to surfboards. |
7. | Options – Although my cardinal rule is not to invest in something I don’t understand, I found a way to trade options that I understand and also believe in. Like real estate and insurance products, most options strategies are speculations. I’d advise against them. But the way I do it – selling puts on high-quality stocks – has worked very well for me. |
8. | Cash – I call this a “Cash Opportunity Fund.” You keep a store of money you add to every year. That way, when the crash comes, you can use this fund to swoop in and buy a bunch of great assets at bargain prices. |
Source: http://www.stansberryresearch.com/dailywealth/3357/how-to-break-the-shackles-of-the-financial-industry
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