Yesterday we took a look at an email I received from a commercial investing company that wanted you to invest your money with them and I wanted to look at it further and include some ideas I picked up from Ed Griffin at the April 2009 MAREI (local REIA) meeting.
The email quoted: Stock market down (Dow) 53.78% in March 2009 from October 2007.
At the meeting mentioned above, Ed reminded us of the rule of 72. Google this and you will get the basic premise that to find out how long it will take to double your money, take the rate of return and divide it into the number of 72. So if you are getting 7% on your money, divide that into 72 and it will take you about 10 years and 4 months.
Now if your stock market holdings are mirroring the Dow and are down 50% in the past 2 years. What do you need to do to bring your value up from today’s numbers back to where they were in 2007? . . . Basically you need to double your money. If you were at $200,000 in 2007 and you are sitting 50% less and $100,000, to get back to where you were, you need to double you money.
Based on the Rule of 72, look at the rate of return the stock market offers on average, I believe somewhere around 7% and it should take you 10 years and 4 months to go from your $100,000 in the stock market to the $200,000 you had in 2007.
So maybe you might want to look at other places to invest your money.
We personally think Real Estate and Privately held Mortgages are a good bet. But it might also be something you know a lot more about. Maybe you are an expert on something like cars and know how to buy them low and sell them high. Maybe you are good and finding antiques in the rough at garage sales and selling them for top dollar on ebay. Or maybe you want to start a business. Just find something that you know you can get a better rate of return than 7% and you could probably get your money back faster.
We will look at Real Estate and Mortgages in our next posts. . .