Australians have way too much of their superannuation tied up in the share market, and theyre following the unsound investment advice of buy and hold spruiked by financial sales people oops, sorry, financial planners.
This flawed strategy wiped out many baby boomers in the first Global Credit Crisis and its about to happen again.
Interestingly, Australians with more of their super in real estate have fared much better.
Australians simply have too much super weighted in shares.
Personally Im reallocating more of my super away from equities and into the following:
Land appreciates faster than houses. Its a much safer, more secure investment (especially if you dont have to pay for it for a decade).
Plus by not having to pay for it for 7 to 12 years (by utilizing options) and then building a house on the land if you wish, this type of investing is a perfect way to hide from the financial storm thats coming.
Think about it. Theres no need to borrow money or pay holding costs, which can send you broke. Its leverage without the borrowing risks. And that means you can wait as long as you want.
Patience is a virtueand makes you rich when you have no borrowing costs.
Ive talked about this before however in a worse case scenario of the US economy going into a 10 year Japanese-like recession, US property will still be a phenomenal investment.
Listen; dont let the global uncertainty confuse you into thinking that the US property market shouldnt be exploited as much as possible especially whenever our dollar is above parity.
Being able to buy at rock bottom prices now (i.e. houses that were $250,000 for $80,000) with high rental returns will ensure most houses are paid off in 5 to 7 years.
And did you know rents are expected to rise further? Its true; the high amount of foreclosures is pushing former owners to become renters.
Plus many of those former owners are happy to rent their house back and agree to rebuy from you later at a healthy profit.
Why would they want to do that? Its simple. They can still get their house back at fraction of what they paid for it. And in truth, theyre very grateful to have a second chance.
Many of these houses, even in a recession, will recover back towards at least replacement value when surplus US housing stock runs out.
But even if it somehow didntyou dont need capital growth in US Property to make a small (or large) fortune.
What about further price drops?
Its possible, but buying houses at $80,000 that were $250,000 in 2008Im more than comfortable that any price drop will be minimal.
Actually in some areas small price rises have occurred as foreign investors compete for bargains.
I saw the Asian Food Crisis coming 5 years ago. Now I see soft commodities booming even more and I predict Australian rural prices will boom in coming years.
Actually, heres something interesting: small farmland in the US has boomed in recent years while residential real estate has crumbled.
What About The Stock Market?
For some months now Ive been saying, hold back, because better buying opportunities will come up.
Now were starting to see some good buying opportunities. And you know what? There will be even better ones coming.
Be prepared to take advantage of the market, but dont be overweighted in equities. It will be volatile.
(Those who know how to insure shares and make money when the market drops would be having a field day recently!)
Forex & Eminis
The Australian dollar has been in a good pattern. Up to $1.10 then retracting 5 to 10 cents, then rising again.
Forex trading is only for the educated though. The same with Eminis.
If financially educated, these can be great boosters to your portfolio. But they shouldnt be your portfolio.
To be nicely balanced, Id have these more speculative strategies backed up with lower risk type strategies such as land and houses.
Gold and silver
10 years ago I told 21st Century Members to buy gold when it was around $200 an ounce.
I explained in my book What I Didnt Learn At School But Wish I Had, Americas debt based Federal Reserve System would crumble because they cant just keep printing money with no reserves.
I bet my members wish theyd bought more gold now
Id still buy gold and silver, even now. Mainly as a hedge, not so much as an investment even though theres still immense profit potential available.
In fact Im trying to go one better and trade some assets for a nice slice of a silver mine ASX listed company to dig it up rather than just buy it.
Renting shares and selling insurance
These cash-flow type strategies can be very effective. The key is doing it over quality assets that have long-term inherent value.
For example: using the Warren Buffett stock selection criteria I modelled off arguably the worlds greatest investor.
Leave this part out of the recipe and youre messing with the strategy.
Remember crisis is opportunity.
Now is the time to be increasing your financial education, to take advantage of the volatile times heading our way.
Panic or profit. Everyone has a choice.
For free educational resources on many of these strategies check out these links:
US Property http://www.21stcenturyusproperty.com
Warren Buffett Strategy http://www.wealthdvdoffer.com
Share Renting http://www.21stcenturysharerenting.com
Selling Insurance http://www.youtube.com/watch?v=2eGsEROSccQ
See Sir Richard Branson, Tim Ferriss, Eddie McGuire, Myself, and a world-class line up of internationally renowned speakers at the 21st Century Financial Education Summit.
Move Your Super by Jamie McIntyre
CEO of 21st Century Education
Jamie McIntyre is an authorised representative of Romad Financial Services Pty Ltd (AFSL No 238 032). Jamie is RG 146 compliant in the areas of derivatives, securities and managed investment products. He is currently authorised to provide general advice and dealing services in Derivatives, Deposit Products, Managed Investments and Securities (ASIC No. 321 315).
About the Author: Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also author of the bestselling book What I Didnt Learn At School But Wish I Had, successful entrepreneur, investor, sought after success coach and speaker