Stop The Insanity, Take Charge Of Your Financial Future

Premise:
Given the worldwide attitudes towards business, class envy, confiscation of earned wealth and big government changing the rules of the economic game on a daily basis, the investor who actually believes investing in a portfolio of securities will generate a significant profit after considering all of the above plus an upcoming tax frenzy on any profit coupled with a strict limit on deductible losses is crazy.

Comment:
Bloggers, financial “gurus”, business media and the securities industry keep trying to find the needle in the haystack (or a diversified variety of needles tucked into a maze) that will turn a handsome profit. Yet, we suspect in our hearts that this game is now politicized at best and rigged at worst.

Funny, “winning” in the world of investments now is determined by who lost less money than someone else. Criticism of current government economic policies - or lack thereof, brings scorn from national political operatives and their shills on cue. And then, quickly,almost all critics cave in and grovel back to the politically correct economic thought of today to not be scourged again. Financial information publishers ink, blog and blather incessantly with “informed” opinions - most all quickly ending up on the ash heap of history.

One Solution:

Take charge of your finances and tax reduction strategy. Be hands-on.

Your career is your main source of wealth. Educate yourself, earn as much as you can and continue to work for financial security as long as you are able. My most engaging acquaintances over age 55 are working, not loafing. I know my limitations, and wish I could do more, not less.

Carefully selected rental real estate with monthly rental income and legitimate tax write offs will likely outperform almost any other investment over the long term. Decreasing real estate prices do not materially impact rent. Rather, it allows the active real estate investor to double down selecting more properties on the cheap and still command a solid rental return. Certainly, there are a few areas (on the coasts and one industry towns) where investing can be very dicey, but they are the exception to the remainder of the country. Rental real estate is one of a few protected income and tax benefit schemes that enjoys bi-partisan support. No class envy is noticed when it comes to providing shelter.

Most real estate investors fail because they do not comprehend that rental real estate is in the final analysis a people business, not a brick and mortar business. Effective tenant selection and maintaining a respectful relationship with renters is number one in importance. Having a few reasonably priced, reliable workers to assist with maintenance and supplies is a close second. Importantly, you are in control and not subject to the vagaries of daily (and often conflicting) media or salesperson advice, commissions and the daily angst of market turmoil.

Should all of your investments be in real estate? No. Spend some of the profits on yourself for enjoyment as others are glued to CNBC. A Permanent Portfolio of short term bonds, stocks for the long term and inflation protected securities with money that is precious to you coupled with a Speculative Portfolio of stocks,especially ETFs, or eclectic investment guesses with money you can afford to lose (or get lucky with) will spice up your investment life.

A basket of ETFs encompassing high quality U.S. short term bonds, foreign short term bonds, a mutual fund such as Fidelity’s Strategic Income Fund (FSICX), perhaps a little gold, inflation protected securities such as iShares Treasury Inflation Protected Securities (TIP) or directly through the U.S, Treasury Direct purchase program web site, a smattering of commodities such the Jim Rogers’-inspired fund, RJA (RJA) and a very few individual stocks that have guttered out yet possess good products and skilled management, especially in the energy and financial sectors, could be included in your portfolios. Remember, the tax man cometh for profits with a vengeance in a year or two. I believe that Congress will gegatively alter the tax structure of IRA’s, Roth’s and other retirement accounts in the future. No passive security profits will be safe, regardless of where they are placed.

Investors had better look at tax strategies and investing programs in equal measure.

Being in control of your financial future is not difficult if you tune out the those that want to substitute themselves from your personal responsibility as an investor -and your money.

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