The word "Investing," is thrown around by everyone and more or less implies some form of sophistication on the part of the user. Invest in gold, invest in real estate, invest in the stock market, you hear these phrases every day.
Now lets examine another word; "speculation." Speculation is like betting on the horse races, and pays well if you are right. You stand to loose it all if you're wrong.
Now when you invest, you get "a" return on your money and "the" return of your money over a certain time span.
The thing you need to consider about an investment is the rule of 72. Divide the interest rate into 72. A bank paying 5% interest would result in your money doubling every 14.4 years. Not a very good return, but you have fast access to your funds.
Investment real estate is and even better one if you can purchase the rental for 100 times the monthly rent payment (very unlikely here in San Marcos). So if the rent is $800 per month, a purchase price of $80,000 would be a moneymaker. In this example the bank would give you a loan if you put down 20%. Your original investment of $20,000 after you pay off the mortgage would give you $10,000 a year in retirement income. Not to mention a hedge on inflation a tax deduction, and 5 to 1 leverage with bank money.
Stocks used to be a good investment; they paid a 3% to 6% dividend. Its hard to find one that even pays a dividend today. Which brings up a pivotal point an asset can change from an investment to a form of speculation. Housing in our area is purely speculation, nobody is buying rental real estate.
You could start a business or whatever, "Invest in yourself," is a great credo.
The true test of your investment is that it provides a consistent yearly return. So if someone comes up to me and says they are investing in the stock market or real estate, I know what they expect to accomplish but in reality, they are at the two dollar window betting on the daily double.
My portfolio has 10% in pure speculation. I buy what everyone else is selling. Also at the other end of being conservative, I have 10% in gold and silver and I don't even consider it an investment. It is an emergency form of cash. I bought $1,000 worth of 50 cent pieces back in 1985 for $3,500--it probably worth $12,000 today. Trying to store 63 pounds of silver in a safety deposit box is a real joke and a certified pain in the butt especially if you change banks. Gold is a little easier to store. Neither one of them returns any interest, so all you get in return, is true purchasing value in the future. That leaves 80% of your assets to be invested.
And at this point you need to stop and ask yourself one question, do I have the time to research and invest for my future? If you answer "no" you don't have the time, you are in a world of hurt. Your last few years in a rest home with the words running through your mind, "if I had only spent more time managing my money," is a hell of a way to review your life.
Right now real estate is a very poor investment. Stocks don't pay any dividend, it like giving an interest free loan to the kids--you might get it back. The banks are paying 5% which is not something to really get excited about. So where to we go from here?
As a 10% value of your portfolio investment, I suggest gold and silver. Gold could be fairly valued at $13,000 an ounce if valued at 1932 prices and as backing of the US dollar (we know that is not going to happen). Silver, the 100 oz Englehart bars make very decorative door stops. Just don't go whacko--10% and stop there.
From here, you ask the question what's a good investment at this time? The answer is, there aren't any. It sounds strange, but with real estate collapsing, the stock market paying no dividends and the interest rate so low, we have to wait. Something is about to happen, what it will be is anybody's guess. A little patience, say a year wait, should see opportunity knocking. Patience is a virtue