When the recession became a real problem to the economy, the real estate market was the hardest hit in terms of investment properties. The value of homes and other property types plummeted quickly and drastically. Homes that were valued in the millions of dollars were now sitting at an all time low of barely six figures. Now that the recession has lifted somewhat, what does that mean for investing in real property?
What you want to do in the stock market is never to have a losing year. Taking gambles to make huge gains is a good way to lose more than you put in. You certainly could hit it big, but the odds are against you. In everything you do, you want to work so that the odds are in favor of your making moderate but consistent gains all year long.
Understanding the local trends is the first step to safe real estate investing. Knowing what the target area is doing and how sales are trending is essential, as well as knowing what other investors are getting from the same market. What has the average investment in the local property been going for? How long are the properties sitting on the market? How many have gone to auction?
While these are just basic questions, the answers to them can help determine the outcome and garner a successful investment. The answers are called market indicators and they are used to help the investor make a proper decision about investing in a property or not.
In other words, none of the three basic investment areas where most people invest look very attractive. That's what makes investing money in 2011 and going forward difficult. If interest rates continue to climb bonds are guaranteed losers and stocks will eventually get hit. Safe investments might not look attractive when they start paying at 1% or 2%, but they will at 3%, and that's where folks will put there money.
So, how should most people invest money for 2011-2012? Cut your exposure to bonds and avoid long-term bonds and funds that invest in them. Long-term bonds and funds will get hurt the most if rates rise significantly. Go with intermediate or shorter term bond funds. Move some money into money market funds. They are safe and the interest they earn will automatically go up with rising interest rates. Investing money in stocks or equity funds should remain a part of your overall strategy, but avoid aggressive growth issues or growth funds that don't pay significant dividends. Look for dividend yields of at least 2% in high quality stocks or equity funds. Growth stocks are often hardest hit when corporate profits fall.
The biggest thing that you can do is be careful and to play the trends so that you always come out ahead. Do not try to time everything to the minute and do not play hunches and you will be fine.
What you want to do in the stock market is never to have a losing year. Taking gambles to make huge gains is a good way to lose more than you put in. You certainly could hit it big, but the odds are against you. In everything you do, you want to work so that the odds are in favor of your making moderate but consistent gains all year long.
Understanding the local trends is the first step to safe real estate investing. Knowing what the target area is doing and how sales are trending is essential, as well as knowing what other investors are getting from the same market. What has the average investment in the local property been going for? How long are the properties sitting on the market? How many have gone to auction?
While these are just basic questions, the answers to them can help determine the outcome and garner a successful investment. The answers are called market indicators and they are used to help the investor make a proper decision about investing in a property or not.
In other words, none of the three basic investment areas where most people invest look very attractive. That's what makes investing money in 2011 and going forward difficult. If interest rates continue to climb bonds are guaranteed losers and stocks will eventually get hit. Safe investments might not look attractive when they start paying at 1% or 2%, but they will at 3%, and that's where folks will put there money.
So, how should most people invest money for 2011-2012? Cut your exposure to bonds and avoid long-term bonds and funds that invest in them. Long-term bonds and funds will get hurt the most if rates rise significantly. Go with intermediate or shorter term bond funds. Move some money into money market funds. They are safe and the interest they earn will automatically go up with rising interest rates. Investing money in stocks or equity funds should remain a part of your overall strategy, but avoid aggressive growth issues or growth funds that don't pay significant dividends. Look for dividend yields of at least 2% in high quality stocks or equity funds. Growth stocks are often hardest hit when corporate profits fall.
The biggest thing that you can do is be careful and to play the trends so that you always come out ahead. Do not try to time everything to the minute and do not play hunches and you will be fine.
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