Whats the best way to invest a small amount of money?

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

bike756 you have to keep in mind many of the people on this forum are older 30+yrs old and already own homes, have savings accounts, have retirement accounts.

I can almost guarantee none of the people who suggest buying pure gold or ammo have actually done that. They suggest that because they have other means to fall back on like savings or a pension plan through their company, or their home/land.

Buying gold and ammo won't help you buy a house or buy land to build a house and a farm. You have to make your money grow before you can do that. We are not doomed in the next few years as many here like to think. So just be smart with your money and don't blow it on dumb stuff.

joeltrout

patience · Expert Joined: Jan 04, 2008 Posts: 1521

joeltrout,
I hope and pray you are right, but at least three analysts I've read this week are predicting US, and maybe wider, financial collapse by September of 2008, including a lot of bank crashes, and a falling dollar. That says to me, NO paper investment of any kind, but hard assets of some kind that will help provide your needs, like Heineken was saying.

TnAndy · Heavy Crude Joined: Aug 31, 2005 Posts: 100

Uniquack · Coal Joined: Mar 09, 2008 Posts: 15

I'm a student and got a few thousand dollars together in 2004. I bought gold first on goldmoney, then the kitco pool account, then through the GLD ETF.

Goldmoney isn't as useful anymore because banking regulations require you to wire your money now; you can no longer just use the ATM system to transfer money between it and your bank accounts.

At this point, with gold at $1000, I'm unsure whether to take profits and sell or hold on through what I believe will be a minor correction. But I'm now leaning on staying in. I think even if the absolute value of gold is headed for a drop because global demand declines as spending goes down for jewelery due to a global depression/recession its relative value to the dollar will only be rising. The fact is the dollar is going to keep falling more, and so that should make gold continue to rise in value relative to the dollar, though maybe not as fast as it had in the past.

Also there is the historic ratio of gold ounces to a barrel of oil-- look it up, you'll find gold is undervalued relative to a barrel of oil, so if oil is now up to $110, then gold should be rising too.

Also, if you start getting more money each month, I would recommend investing in CSX and other commercial rail stocks. Coal is going to be more valuable for domestic use as oil and natural gas keep rising-- and you need trains to transport it. And high diesel prices are starting to put truckers out of business. Well, I'm sorry for the drivers but in the long run this should lead to more efficient rail transport systems, which will boost the value of the rail companies.

threadbear · Expert Joined: Jan 22, 2005 Posts: 7505

All good advice, Uniquack. I second it. Rail will be very important in the future.

threadbear · Expert Joined: Jan 22, 2005 Posts: 7505

JoelTrout, Gold and Canadian currency IS my pension plan. At the present time gold looks to have a lot of up side, and it's also considered the MOST conservative investment one can make. It actually embodies conservatism and that's why brokers have been talking it down, or ignoring it. They want people to continue to gamble on the markets, so they can continue on with their broker jobs.

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

patience and TnAndy,

How do you suggest bike756 save up for buying a house and/or land? Owning a piece of property seems to be the foundation of everyone's goal of sustainable living.

Gold is hitting highs right now and has been for several months. I still consider gold at $700 high. Look at this chart.

In Jan 2002 gold was $281.65. I do not think it will fall back to those levels but what if it falls back to $500. (which is still a high price). Just because gold is high now doesn't mean it is going to be busting new highs 3 years from now.

The amount of money doesn't matter. A diversified strategy is what is important. Don't get caught with 100% gold when gold drops in value that saying don't get caught with 100% stocks when stocks drop.

TnAndy, I bet you didn't pay off your house because you invested in gold and silver.

If you will read the prior posts by bike756 he said he need help with all the financial stuff. That is what I presented. I did not say buy all stocks. You guys get so defensive when someone brings in an outside idea different then yours. Just calm down a little we haven't hit the stone-age yet.

joeltrout

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

I am not trying to make you guys mad. Just trying to help him out.

joeltrout

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

threadbear · Expert Joined: Jan 22, 2005 Posts: 7505

A diversified strategy is suicidal, at the moment, JTrout, as is the other old chestnut, "buy and hold, and you'll be okay" Diversifying into an indexed Dow fund, which is the best way of diversifying across a wide spectrum of stocks is stupid. They are nearly all down and poised to go down further. Right now you want to hedge. Repeat and memorize. I must hedge against inflation. I must hedge against inflation. And just to be extra extra careful hedge against that hedge by putting some funds in a strong currency, like the suissie.

smallpoxgirl · Moderator Joined: Nov 08, 2004 Posts: 5727

joeltrout · Light Sweet Crude Joined: Sep 19, 2007 Posts: 1317

threadbear · Expert Joined: Jan 22, 2005 Posts: 7505

I thought you were referring to diversifying within the stock market, Trout. My mistake.

threadbear · Expert Joined: Jan 22, 2005 Posts: 7505

Uniquack · Coal Joined: Mar 09, 2008 Posts: 15

Just as an interesting aside, today I calculated the percent of the fall of the Dow in 2000 and compared it to the current situation. Take a look at http://finance.google.com/finance?q=.dji&hl=en&meta=hl%3Den
and move the left slider below the graph all the way to 1980-- you can see that the precipitous drop that started in 2000 dropped over 3993 points and that was mainly because of the collapsing dot com bubble.

Far more money has been created since then in the FIRE sector bubble, and far more can be lost, yet the DJI has only dropped 1949 points! If the 2000 plunge lost 34% of its high value, so far the current market has only lost abbout 14% of its value. It could easily lose at least another 2842 more points to even reach a 34%, which would bring the dow to 9302.

So yes, I think it's important to get out of most of the stock market, especially those sectors that are very exposed right now. As business investment drops and fewer shoppers are buying, technology demand will drop precipitously.

The numbers:
pre 2000 high: 11522
post 2000 low 7528
difference =3993
pre 2008 high: 14093
as of 3/13/08: 12144
difference =1949

Taking it as a given that the market has a lot further to go on the downslope, much money will evaporate in lost value, but much will also be frantically seeking new, more stable homes. New bubbles may even result from this in the long run (see the recent article in Harper's about alt energy stocks being next), but in the short term (the next 3-4 years, say) the historically safe and recently illustrious rise of gold will glitter in many a frantic eye right about now. So I think gold is still a safe bet.

Again, even if that's not true, and the absolute value falls, gold's value relative to the dollar will climb because the dollar's value will fall. No numbers to back myself up on this, of course, but it just makes sense to me intuitively.

When gets above $1700 or so, then I might consider getting out just before the "smart" money also bails. And where will those super elite be putting their money then? In the bottomed out real estate market again, but this time for agricultural land on which to put a new class of credit-card indebted serfs?