First, remember that in times of high inflation there are three main multi currency ways to keep the purchasing power of your savings…real estate…commodities and shares.
This is why I am buying more and more real estate now. This is is also why I track six multi currency portfolios that consist mainly shares.
These multi currency portfolios have performed really well over the past two years but were in a down period from November 2007 to March 2008. They have all risen in April and May 2008, but I especially noted that seven shares in these portfolios did quite well even in the down period when almost everything dropped.
I call them the magificant seven multi currency shares.
Here they are:
Samsung Electronics-GDR COM
Novo Nordisk B
Vestas Wind Systems
Kurita Water Industr.
I review this in more detail in our next multi currency portfolios course.
Now here is a wa that some of us can let te government buy these shares for us.
Most of us will fight inflation best either with real estate, shares or with our own businesses. There are a few lucky commodity investors that are good. I am not. Too much time…to much up and down. not my psyche.
So yesterday I paid attention when we received a note from the Social Security Administration. Shortly Merri will reach full retirement age. The flyer explained that she can be paid about $1,400 a month if she begins taking her Social Security payments now.
Our plan had been to wait until Merri was 70. We are active. We are not retiring and we do not need the money. Why not wait?
Her payment would increase 6.5% per annum for each year she delays taking the payment. Our thought was, “Let’s just wait”.
Then I started working through the numbers.
If Merri waits 48 months, she will receive more then. But she will have forgone $67,200 in payments. It will take her almost 20 years to make it up. Actuarially, with her health, this makes sense. Chances are she’ll be going strong for more than 20 years….except…the coming together of three multi currency forces have changed our mind:
Force #1: Multi currency Inflation. History and everything I understand, suggests that the $67,200 she can receive in the next four years will be worth more in this time than the dollars received later.
Force #2: The real estate crash. This correction has pushed property and share prices down…so she can use her Social Security to buy a piece of property or shares now. Real estate is one of the three inflation fighters. This is an especially good time to buy real estate…or shares.
Force #3: Low interest rates. The economic slump joined with the real estate crash has pushed US interest and mortgage rates down. We may be able to get a mortgage for as little as 5.5% for as long as 30 years. We will look now. If we can, the $1,400 will service a $250,000 30 year loan. If its less the amount of real estate we can buy will be reduced.
Merri and I hate debt. We abhor debt for consumption even more. We spent an earlier part of our lives paying off all debt and getting ahead so we would never have to borrow. Now of course, we have no debt on anything worldwide.
Yet there are two times when debt can make sense….when you can borrow low and deposit high in a multi currency diversification.
The other is to borrow to buy real estate in inflationary times.
If you qualify for Social Security now and do not need the income, instead of waiting, consider dedicating that income to servicing a mortgage and using that to buy real estate.
An alternative is take the Social Security and invest it all in equities or to fund your own business.
You should not abandon the Three Cs though…Caution, Clarity and Comprehensive view.
This idea makes special sense now because of inflation, real estate and equity doldrums and low interest rates. You still have to research and find good property or shares!
There may be some positive tax implications as well. If you buy investment property, the interest on the mortgage is tax deductible. Yet you do not have to pay income tax on the Social Security unless other income is over $25,000 (single filing) or $32,000 for joint filing. I see several ways to gain tax advantages and am checking with my accountant on this. You should as well.
I can begin collecting early Social Security this year as well and will be running the numbers for early retirement.
Fixed income bonds, pensions….Social Security face a great social-economic problem. The destruction of multi currencies, globally, as a store of value reduce the purchasing power of fixed income.
We are seeing global inflation. There are three ways to profit from this: shares, commodities and real estate. One way to beat this dilemma is to borrow to buy real estate or shares now and use the fixed income to make the payments…especially if you buy a property that’s distressed.
Until next message, good global investing.
Lean more about borrowing for real estate and share investing May 23-25 or October 3-5 at International Investing & Business Made EZ North Carolina.
See dates for our Ecuador courses and tours:
Here is one condo we’ll see on the Coastal tour. $30,000 asking price.
This tour will include a FREE Quito tour. Here is a colonial house we’ll see
on the tour.
with this view.
Speaking of views here is one unfinished farm house we view on the Imbabura tour with this view.
Here is the unfinished house…asking price $50,000
including acres of rich farmland.
We now have some low cost hotel options for delegates who wish to attend any of the tours in Cotacachi on a budget. See Cotacachi hotel information on hostels