Friday, October 5, 2007

Investing in Volitile markets, Surf's up!

I am going to share an idea I came up with a few weeks ago that has been going well. Here is the background: I am a big fan of investing in stocks, bonds and whatever else. I have been doing it since I was about 12. The thing is though that I am a huge wuss when it comes to the market. When stocks are shooting up I get really excited and throw money into the market. Then when the market falls and I start loosing money I typically panic and pull out. By doing that I tend toward selling on the lows and buying on the highs. I guess some investing is better than none at all. Anyhow I invested in some really secure high yield municipal bonds that provide a slow and steady tax-deferred income stream. That was so boring! I couldn't take it. I am young anyhow so I hear taking more risk at this point in my life is the sensible thing to do. Anyhow I needed to get into a nice risky investment that would still allow me to have enough money to put a down payment on a house when that time comes. The option I came up with: REIT's. They make total sense for my situation and here is why. I want risk and some excitement, REIT's provide that. I want something with high historical returns, REIT's have that as well. I want something that will still give me enough money for a down payment when the time comes. REIT's may be the best option for that. My logic is that if I put my money in something that will track the general trend of the housing market, and say the housing market plummets like so many of us are afraid of, I will lose a bunch of money. The plus side though is that I will not need as much money for a down payment if that happens so I am still OK. Say on the other hand that the stock market as a whole plummets but hosing holds firm. My REIT's will hold to the general trend of the housing market and I will not be hurt as badly by the fall of the stock market as a whole. So as I see it, REIT's although risky are the best option for me and my goals. For what it is worth, that is all for now...

No comments: