Real Diversity

[ribbles]

Prosper & LendingClub
Great to throw $20k at, but there's a bit of work to keep 'em performing. Great returns.

TreasuryDirect
Poor returns, but online trading and ACH make even the 28 day T-bills easy and liquid.

Gold, Silver and other commodities
From a coin shop, eBay, or now even as an ETF (Symbols SLV,GLD) for liquidity. 3% average performance for gold. Gold & silver have done well over the past few years. Other commodities have perked my interest of late.

ETFs
Great for real diversification. Often highly volatile, fully liquid. I like them because they offer positions that you cant get anywhere else. Where else could I short the entire US commercial real estate sector in aggregate? (Commercial Real Estate Ultra-Short I think)

Land
US & foreign (first world). Unfortunately it requires a bit of luck picking the right area, amenities, climate, soil, road access etc. Can't start for less than $35k. Highly illiquid and generally poor returns. I've been looking again lately.

Stocks & Funds
Still not seeing consistent returns from long holds, only from buying and immediately setting 10-20% sell orders. What am I doing wrong here? Lately I've been hiding under index funds.

Venture Funds
People keep bragging about them, but I still haven't seen good returns, even viewing all my experiences in aggregate. Roller coaster ride. Highly illiquid. Bad for blood pressure.

Your moms Mortgage
Don't laugh. Good returns. I know of 2 people collecting the line of credit rate minus 1%. Charity begins in the home. Keep the money in the family. Cliche, cliche.

Foreign Currency
Wouldn't recommend using a forex platform as the broker makes all of your money, not you. This is because you need to make the broker his spread before you can sell. Had success with xe.com.

Rentals
As long as you can do the math and factor in all the variables (i.e. future value of your deposit) they can work. Very illiquid. Potentially lots of work. Legal risks.

My own debt
This has actually been my best performing investment - myself. Zero anxiety. Freedom from the shackles of having to hold a regular pay check. High returns. (9% credit card quietly crept to 19% - what happened?)




Always interested in further diversification.

Mod: Changed "EFT" to "ETF" as they are very different terms in the finance world. - Foo

[go4reward]

Prosper & LendingClub
Great to throw $20k at, but there's a bit of work to keep 'em performing. Great returns.

Returns were great until the credit credit crisis.

[foofiter]

I am still doing well with Prosper too. Had 2 payoffs this month and only 1 charge off so far. I am still ahead of the game. I agree that one should limit their investment in social lending since the risk and time to manage it all can greatly increase.

My current plans are to build it up to about the 20-25k level then start taking income over and above that amount and shifting into other investments such as my Roth IRA or other savings.

Foo

[go4reward]

I am slightly over the break even mark. It has been not so great investment for me so far with Prosper. But looking from a different angle. It is slightly outperform my stock investments last year.

[Investar]

Thanks for this post, Ribbles. I've been meaning to reply for some time.

I think you covered all the bases and then some I hadn't considered. I'm happy to see you listed the most basic anchor of a truly diversified portfolio. I call it "Whiskey and Guns" — you call it Gold, Silver and Other Commodities. When the whole system of trust in paper promises fails, as it nearly did last year, the fall back has to be real things you can touch and feel. So I have a cache of dual-purpose silver. It's got both collectable value for now and bullion value in the event of monetary collapse.

But silver will have limited potential when I barter with the farmer for foodstuffs. What's he gonna do with the tenuous bauble? He's got what everyone wants and needs nothing they have. I figure a nice aged whiskey is my better bargaining chip for his fruits of the field. I'll use the silver in trade at the distillery to resupply my stash of whiskey. Better bang for my buck, I figure, as those guys ride closer to the up-line where precious metals will be hoarded in earnest.

And the guns? To protect my whiskey and silver, of course. They will be the last to go, save one, which I'll use on myself. Oh woe! Here's forever hoping my silver's best value remains its numismatically driven collectable value! While gold and silver bullion, mining, etc have seen remarkable speculation of late, metals languished during most of the past two decades (check me on that) and in the long run, just haven't kept pace. They are at best a preservation tool (versus income or growth).

[sosocratic]

I agree with commodities and have been buying silver myself, precious metals mining funds, and energy finds myself.

I have also been looking into foreign  investments as I am not sure the long term outlook for the dollar is great. Even if the stock market goes up the yeild will be less if the dollar is not worth anything. I can't see the dollar failing to lose value with our trade deficicts and printing of money to cover government spending. If you print money and then ship it over-seas the value will go down.

One intriguing possibility is index funds based in Australia. Australia is rich in commodities and poised right next to Asia (so they have the lowest shipping costs to Asia of industrial raw materials exporters). They have a trade surplus now that is only likely to go up as the Asian markets for their raw materials grows. They are half way around the world and do almost no trading with the US so are relatively immune to US market problems. Their GDP is currenly above 3, more than twice the rest of the developed world, and their central banks just raised interest rates as a hedge against inflation. At worst you will have an index in a good ecomony with a stable government. That is more than you can say with US investments (which I still have).

Also intriguing is Norway which is not on the Euro (so will not be  brought down as much when the US economy drags on Europe), is the third largest oil exporter after the middle east and Russia, has enough natural gas to supply all of their needs for the rest of the century while exporting their oil to others, and is currently building a large "rainy day fund" to cary them through when their oil and gas production begins to drop. They have a government that is actually showing sound planning for the future decides away.

[ResearchPro]

Russia, has enough natural gas to supply all of their needs for the rest of the century while exporting their oil to others, and is currently building a large "rainy day fund" to cary them through when their oil and gas production begins to drop. They have a government that is actually showing sound planning for the future decides away.

Being a Russian, I quite disagree. This fund was built while the oil was 150. Actually, Russia is spending this fund fast now, and major economic troubles are expected after this summer ends. Unemployment is not publicly available but studies show about 20%, % of poor is huge. This is not even counting political instability or unpredictable moves of the president who is very much like a dictator now. So I wouldn't dare to touch this market right now.

[go4reward]

Commodities (gold and oil) are the way to invet in if US dollars are still falling.

[sosocratic]

Russia, has enough natural gas to supply all of their needs for the rest of the century while exporting their oil to others, and is currently building a large "rainy day fund" to cary them through when their oil and gas production begins to drop. They have a government that is actually showing sound planning for the future decides away.

Being a Russian, I quite disagree. This fund was built while the oil was 150. Actually, Russia is spending this fund fast now, and major economic troubles are expected after this summer ends. Unemployment is not publicly available but studies show about 20%, % of poor is huge. This is not even counting political instability or unpredictable moves of the president who is very much like a dictator now. So I wouldn't dare to touch this market right now.

No, no, no - sorry to be unclear.

Norway is building the "rainy day" fund.

[go4reward]

Norway is building the "rainy day" fund.

Not just Norway, but also for all of us to have a safefy net as well.