When the Oracle of Omaha speaks, smart investors listen, so when Warren Buffet said recently that right now is not a great time to invest in the stock market, we paid attention. It’s all too easy to forget about the major financial crises that hit the world economy in 2008… And continued to wreak havoc for years, but investors worldwide would do well to remember how quickly things can change and make moves now to protect their hard-earned assets before the next big stock market drop happens. Because it will.
Also, just because the economy is humming along nicely does not mean it’s a great time to invest in stocks and mutual funds. Read on to learn more about portfolio diversification and stock market volatility!
“The decision [about whether to invest in] the stock market should be made independent of the current business outlook”, Buffet told CNBC late last week. “A strong economy doesn’t necessarily mean it’s a good time to buy stocks”.
Sure, the U.S. economy seems to be in great shape right now, and despite a fair amount of stock market volatility this year, things seem to be fairly stable at the moment. Still, Buffet remains strong on diversification and advises against a short-term investment strategy.
“I don’t think you should buy stocks based on what you think the next six months or year is going to bring”, he revealed.
Other factors, such as the Federal Reserve’s decision to hike interest rates today by 0.25 percent should also play a part in your decision about where to invest. This move will increase basic cost of living in a variety of ways and will even make it harder to secure financing for some, while driving up the interest we all pay on things like mortgages, credit cards and auto loans.
Even more alarming, the Fed also announced that it’s likely to implement at least two more interest rate hikes by the end of 2018… In part because of the nation’s strong economy. In what could be a foreshadowing of darker days to come, this marks the highest level of interest rates in the U.S. since the financial collapse of 2008, and many economists are concerned that a looming trade war could harm growth. One way to protect your assets and recent portfolio growth from stock market volatility is to cash out and diversify by investing in more secure options like brick and mortar income producing real estate and Exchange Traded Funds (ETFs).
Secure Retirement Income
Did you know that nearly 10,000 of the world’s 79 million baby boomers retire every day? Most of these retirees have built their retirement portfolios based on the concept of accumulation, but with retirement comes the need to start drawing down and actually living off accumulated assets, which is often the scary part. As a result, it is more important than ever for investors at or near retirement age to secure ongoing investment income they can rely on – and let’s face it – the stock market is not reliable, if you need to make large enough returns to actually live on.
That’s where real estate investment comes in. Smart investment properties can easily produce 8-14 percent return on investment, provided you know where to look and buy the right property for your situation. Too often, investors feel trapped by location or circumstances, and don’t realize they can buy real estate with an IRA account to maximize tax-deferred returns, or that they should be looking at properties based on the popularity of the location, not just in their immediate vicinity.
“In an environment where interest rates are so low that people can’t afford to live off the 1% or less they receive on savings accounts or CDs or the 2-3% that U.S. Treasuries pay, a 7% annual payout looks very nice”, wrote Investor’s Business Daily.
Investment properties like the luxury condos and vacation homes at KASA Hotel + Residences in Tulum, as well as Villas Aqua in Puerto Aventuras, are excellent examples of how you can invest in real estate that pays ongoing, proven return on investment… Without enduring the stresses that typically come with buying property. Designed to offer innovative “No Worries, No Hassles Ownership” these turnkey vacation home rentals are approved for purchase in your IRA account and provide a great place to vacation with friends and family, but they also can be rented out by an experienced property management company to provide secure ROI you can rely on.
Do you feel confident investing in the stock market right now? Let us know in the comments!