When guys get together anywhere, there is forever some sport to talk about, but then there is always time to run through what investment escapades one or the other has been through recently. No one is really kind to their money managers in these conversations either; but what are those poor managers to do? It's a tough market for them - and they don't get a standard fee for their services; they work on a 1% commission. They really wouldn't be standing by watching your assets take a dive if they could help it; their paychecks are taking a dive too. And they're so sick of seeing their incomes evaporate month after month, they're looking to new ways to invest money, to bring their salaries up to speed. New, alternative ways.
Mostly, money managers are not so happy with the traditional thinking, that investing in stocks is the best way forward. If you would read any professional investments magazine for the people who manage your money, alternative investing is something they can't stop talking about. What exactly is 'alternative' as they mean though? They just mean investments that are not welded to the stock indexes and the treasury bonds. They are considering directing their clients to ways to invest money in ways like buying up farmland, investing in managed commodity futures funds, and different unrestrained mutual funds. So what is all this business with the farmland?
Well in Canada, farmland investment has been quite popular for a while. This should catch on in the US soon too. Of course, you do need a certain minimum funding to get into this, typically about $100,000. You can buy a dozen acres of farmland, lease it out to those who till the land, and collect your $5000 royalty check every year. And since land is always in demand, you could always sell it to get your money back, and then some. Why, in the last 20 years, land prices around the corn belt have risen about 8% every year. But land prices do fall, and there is no real guarantee. In Iowa, land prices frequently lose about half their value once every five years or so, and rise up to gain a quarter in the following years. But there is a certain satisfaction involved in making your money tilling the land, even if by remote control.
Managed commodity-futures funds offer some really good ways to invest money. And they're pretty exotic too. What they do is they buy futures on whatever they think is going to be hot in coming years, livestock, grain, or anything. And they hope that that product comes to be in demand. It doesn't take much money to bet on the future in this way, and so many people could crowd towards this soon. But the proof of the pudding, you know? Investors seem to be making a lot of money this year on this kind of investment. You don't go to an ordinary stockbroker, you go to a commodities trading advisor for this. Your broker or advisor will charge something like a fifth of whatever you make. These used to be just for the big investors until recently. But hedge fund sponsors are now bringing the market to you and me. You can get in with $5000.
It may actually be time to get out there and find new ways to invest money; the traditional avenues haven't really been very kind to us lately. The best we can do now, is to read up.
10:45 AM