What people think is safe could turn out to be very dangerous. Are you pouring money into U.S. Treasuries thinking this is a safe haven? There could be real danger in putting your money in. The 10-year U.S. Treasuries has fallen off a cliff at 2.15%. That is a very low rate. When interest rates rise, the value of these bonds will go down. Do you think that interest rates are going to go up, or do you think that interest rates are going to keep going down? Higher interest rates will not be good for this long-term investor. Once again, the small-uninformed investor gets hurt.
Are there any better choices? I am glad you asked. Of course, I just happen to see them, they are annuities of all kinds, and single premium life insurance of all kinds would provide safety and favorable returns. When interest rates begin to rise, you could use free withdrawals to ladder your money up the interest rate cycle. CDs and money markets create a different challenge. The minute you invest in one of these, you are already losing money. If inflation currently stands at 3.61%, and you are buying a six-month CD paying .4%, you have already lost 3.21% of your purchasing power of the year. That means in 10-years, your money will only purchase half of what it use to purchase. Then you have to pay taxes on top of that.
Finally, in regards to gold, silver, Oil and other commodities, you should have some of all of these. However, many people now think of these as safe havens. They will be wrong. There are many technical reasons why, however, the most important one is this. Governments manipulate prices! When the governments of the world decide to manipulate these prices, many people will-be-caught in something they don not understand.
Here are some articles I hope help.
•Title: Those Safe Havens You’ve Been Flocking to Aren’t So Safe www.wsj.com The Wall Street Journal
http://online.wsj.com/article/SB10001424053111904009304576530802327053490.html
•Title: The Hidden Dangers in Safe Havens www.nytimes.com The New York Times
http://www.nytimes.com/2011/08/20/your-money/the-hidden-dangers-in-safe-havens.html?pagewanted=all
•Title: Market Rout—The Sound of Bursting Bubbles www.smartmoney.com THE SCEPTICAL MARKET OBSERVER
http://scepticalmarketobserver.blogspot.com/2011/04/sound-of-bubble-bursting.html
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Jerry
Jerry Szeszulski (shoe shell ski)
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