(or where
4%
per MONTH or more might safely be found)
PART 1
Finally I got some retirement money. But not enough to retire soon, nor anytime
in the foreseeable future! It led me to investigate what alternatives there are
for investing such money. This resulted in a multi-year long project that began late
in 2003. Money is an important issue and the cause of much anxiety for most of
us. Here I want to share with you some of the
results of my own search to find something that both achieves certain objectives
and provides peace of mind. DISCLAIMER: This is not investment advice, nor
recommendations for any particular investment! You are responsible for your own
investment decisions and their outcomes.
MY GOALS:
I sought alternatives that might best satisfy the following requirements.
Understand that I have a skeptical view of the economy and its future, so safety
is a huge factor. I believe the debt situation in the US will have a major
negative influence on valuations of things, although not in the short term, and
not all at once. Here are my guiding questions:
--What is the safest place to have my money, and still make some interest
on it, if the economy goes very downhill?
--What is the safest way to invest my money and make a significantly
higher return than CD's, to build worth more quickly, with no drain upon my time
or attention?
--BOTTOM LINE: I want PEACE OF MIND, not risking loss of my nest egg in
event of severe economic decline, and to have the chance to build it more
quickly than 5% per year.
Through the course of these years I investigated practically everything you can
think of, and things you don't even know about. I have consulted with financial
planners, investment advisors, and done extensive financial and investment
research. Add to that years of actual experience trading the markets in stocks,
options, futures, and currencies, and exposure to a huge variety of advisors,
account management providers, trade recommending providers, and
investing/trading systems. I have considered real estate, tax liens, and similar
investment approaches.
I wanted to consider everything, to leave no stones unturned, so that I could
then rest easy. Because either I would find something I was satisfied with, or,
I could be satisfied knowing that I looked prodigiously and it wasn't there!
THE RESULTS:
BEST FOR LOW-RISK: CD Ladder at a LARGE bank (the kind that will not go
bankrupt in a depression, such as Bank of America). Another alternative could be
U.S. Savings Bonds (but do investigate what happens to these during a
depression). A CD Ladder works like this.
Rates for 5-year CDs are higher than for shorter term CDs like 1 year. So you
take your principal and divide it into fifths. This year you take one fifth and
buy a 5-year CD. Next year, you take the second fifth and do the same. Every
year you invest one fifth of your principal in a 5-year CD. After 5 years you
are fully invested, and all your money is earning the 5-year CD rate. To be
really really safe, you could have no more than $100,000 at any one LARGE bank,
so all your funds are FDIC insured. The disadvantage to this is that if you need
your money, you can only get 1/5 of it per year without paying a large penalty.
A word on mutual funds. On the whole not very many people I have come across do
well with them. Some are a lot riskier than others. There are expenses
associated with many of them. They are vulnerable to economic conditions. You
cannot get your money out of them on a moment's notice. Having said that, I do
hold some in my accounts. My principal holdings are in ESMAX. I also
have some in EWO, which trades on the stock market but is like a mutual fund.
Check this year's performance of any of these for yourself. After much searching
I chose these based on balancing expected return, likely profitability, risk in
the event of US economic decline, etc.
EVEN BETTER RETURNS: Here is where the biggest focus of the project was
for me, and the bulk of my research over these several years. And, for one
reason or another, practically every single option I found has been rejected
because it failed one or more criteria. The criteria were:
--It not involve my time placing trades or monitoring markets
--It not involve the potential of a large drawdown (more
than 30% of my
account) if it hits the skids for a stretch
--It not be vulnerable to the state of the
economy, terrorist events, corporate earnings announcements, or the rise and
decline of the stock markets or their derivatives such as mutual funds
--It make at least several percent profit PER MONTH, and offer
compounding (leaving the profits in the account to increase the principal) so it
can grow more rapidly
Generally, I found that the best possibilities for meeting these criteria are
MANAGED ACCOUNTS, that have professionals who trade your account for you, who
watch the markets every single moment. This way they can get you out if things
turn sour. But not just any managed accounts will do, because not all markets in
which they can trade are the same. The only market that is open around
the clock and that has decent trade volume all that time, except for weekends,
is the CURRENCY EXCHANGE market. So it the
safest market because if something happens overnight your account under most
circumstances is able to
respond to it instantly, not have to wait for the morning and suffer a huge gap
in the wrong direction. Furthermore, the safest managed currency accounts make
shorter-term trades, so they never risk an appreciable amount of your money on
any one position or outcome. Your account manager always has the chance to stop
the bleeding, should it occur, before any serious damage can occur. And they are
more profitable, because by trading more frequently, they allow for the most
rapid compounding of your money. Some even compound after every single trade or
position taken, if lot sizes permit this.
PART
2
Having identified the best kind of investment option to explore, when I
considered actually investing in these, another criterion emerged as important:
I wanted to be able to open a very small account first, to see how it did. This
way I would not be taking any substantial risk (although there is ALWAYS risk
when investing). Then, if the account performed in a way with which I felt
comfortable, I could add more money to make the profits amount to something
significant. Unfortunately, not all managed accounts offer minimum account sizes
that are small enough -- in fact most DO NOT -- and by "small" I mean $5000
- $10,000 to open.
So my list of qualifying criteria became even longer. After exhaustive searches,
I was able to find a small number of candidates that satisfied ALL the criteria.
If you just can't wait, you can see them now here:
Of course the bottom-line question is what kind of returns did these accounts
indicate was possible? The answer: 4% to 15% PER MONTH or more! If you leave your
money in for a year, 6% per month just about doubles it in that time. This in an investment vehicle that is SAFER than stocks, bonds, options,
mutual funds, real estate, etc.
So why haven't you heard about such things? One reason is that until lately,
managed accounts like this were only offered to wealthy individuals,
partnerships, or hedge funds. Wealthy people usually have financial connections
that you and I will never discover. They invest in managed accounts in the currency market because the returns are so much better than
most other
instruments, and liquidity is high. Do they put all their money there? Of course
not, some of it is in the most conservative investment instruments like CD's,
bonds, and bond funds, etc. But now that so many people are turning away from
financial advisor middlemen, private managed account providers are slowly
opening their doors to the public. It is about time! In today's financial
climate, you are called upon to do your own research if you want to escape the
financial advisor "rut" of single-digit percentage returns on your money. My years
of doing this research for myself has definitely convinced me of that.
My intention is to share with you the essential information I discovered about these managed
accounts, as well as the practical information you need open one for yourself should you wish. I
am a firm believer that sharing is important -- we ALL benefit when we do, and I
think we get to the truth faster that way. So, if you are interested, please
click to the last page of my presentation, "Managed Curriencies" below. Besides
more information about the managed accounts already
mentioned, there I also provide a little more explanation about why these
accounts make such good sense (to me), as well as a short overview of the
currency market itself for those who are unfamiliar.
Thank you for visiting this page.
Feel free to point other people to it. Also please recognize that I am not
giving investment advice, and that you are responsible for making your own
investment decisions and their consequences. All investments involve risk!