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September 16, 2015

Alternative Investment Options

Thank you for attending the Charlotte stop of the Live Richer Tour by the Budgetnista!  Given the short amount of time that we have to speak, I thought that I would jot down some alternative investment options here for you to review.  This link will only be valid until October 16th, so be sure to bookmark and come back!

livericher - Alternative Investments Options

First, before you even begin to think about investing, you must have an emergency fund set aside.  Aim to have a minimum of three months’ of living expenses with an ideal amount being between six months and one year depending on your expenses, lifestyle, and your ability to replace your current income if necessary.  Once you have that saved, bring on the investments!

  1. Want some immediate returns? Pay down your debt!  Bet you didn’t expect that one.  If you pay off a credit card where you are paying a 10 percent interest, that will be the equivalent of earning a 10 percent rate of return on the same amount of money invested in another asset.But it’s even better. The return that you will earn on paying off debt will not have income tax consequences. Therefore, paying off debt can produce superior returns to most other investments. And that return is guaranteed and completely risk-free. If you have debt, this should be your first “alternative investment.”
  2. Always participate in your company’s 401(k) or retirement plan and do so at a rate that will ensure that you receive the maximum matching funds!  Next, increase your contributions to the IRS limit.  The maximum you can contribute to a 401(k) plan in 2015 is $18,000 if you’re under age 50 — so unless you’re making a ton of cash, chances are you have plenty of headroom to increase your contribution another $1,000 if you’re already making a contribution of some kind.  If you’re age 50 and above that amount increases to $24,000.
  3. What about investing in yourself?  How much more could you earn if you added another skill or certification.  I am currently taking a course for $1,200 plus a licensing exam for $300 that will boost my income by at least 10% when completed.  Thats a lot more money for years to come!
  4. Try peer-to-peer lending.  I’ve tried this format many times and have enjoyed my rate of returns.  One of the great things about peer-to-peer lending is that it provides diversification of the loan portfolio that you’re invested in. If you invest $10,000 through Lending Club, the loans may be spread out over dozens — or even hundreds — of individual loans. With that type of diversification, should one or two of the loans go sour, your portfolio won’t get clobbered. And the interest rate you’re receiving is high enough to compensate for the risk of loss.
  5. I like gold, so do a lot of people…but what about silver and other precious metals? Precious metals tend to gain when the dollar is weak and fall when the dollar is strong. Since we can never know exactly when those transitions will occur, it’s a good idea to have a least some precious metals at all times.One of the real benefits of precious metals, whether gold or silver, is that it is one of the few assets that you can take possession of. You can buy gold or silver coins or bullion bars and keep them at home or some other safe place. And in the event of a complete economic or financial collapse, they can then be used as barter.  Plus, they’re all shiny and pretty too! Just remember, don’t buy jewelry, which has a SIGNIFICANT markup.
  6. Ever watched Antique Road Show?  Did it ever make you think about how much the stuff in your grandmother’s attic was worth?Collectibles -– artwork, antiques, numismatic coins and other treasures –- are a lot like penny stocks. Sometimes they pay off, sometimes they pay off big, but most times you just lose money on them.This is an area where you really have to know what you’re buying and its potential resale value. Ideally, you should be sufficiently aware of values that you can buy a collectible for less than it is worth and sell it for more in a relatively short space of time. This is because collectibles don’t appreciate with time the way other investments do. The entire market is based on what a buyer is willing to pay for a given collectible at a certain point.The best strategy is to buy a collectible because you truly want to own it and will enjoy having it. This will guarantee that it will have some utility in your life, and you will pay a reasonable price based on your circumstances. If the item happens to fetch more money at a future date, then you’ll be ahead of the game — as a result of both your enjoyment of the collectible and the financial gain that you collect at the end.
  7. Like to drink? How about wine? Surprisingly, just like antiques, plenty of wines are collectible. Wine is one of the few consumable commodities that can increase in value with age. But that is exactly what can happen with the right vintages, those that are the most sought after.
  8. You have to have a strong understanding of wine in general, and you also need a temperature-controlled room to store them in. This is because you need to store a significant quantity to reap substantial profits. And you will need to keep accurate records of the type of wine, as well as when and where you purchased it. Wine connoisseurs will want that information before buying wine from you in the future.

Were you expecting to see real estate, bonds, CD’s, treasury bills, REITs and the like? You can include these items in your 401(k) portfolio or an IRA portfolio if your company already offers them!

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