Safe Investments
How Safe Investments Can Lower Risk – While Increasing Your Returns
Wall Street seems to think that in order to generate big returns, you have to invest in risky things like tech stocks and growth companies – but Investment U reveals safe investments that generate big returns WHILE LOWERING risk.
This flies in the face of conventional wisdom on risk/reward. And these safe investments aren’t always easy to find.
But our research has uncovered plenty of them, and Investment U readers are always hearing about new ones, such as:
- Safe investments with returns that beat their high-risk counterparts…
- Global Investing Profits that allow you to diversify some of your assets outside domestic markets, so when the Dow dips, your portfolio remains stable…
- Gold investments that are immune to catastrophe in the markets, while maintaining the potential for 100%-plus profits in the next five years…
These are just a few of the safe investments you’ll hear about from Investment U.
Here are a few more…
How Safe Investments like Value Stocks and Bonds Can Beat “High Flyers”
For example, Robert Haugen, in the book The New Finance, proves that buying less risky “value” stocks (defined as stocks with the lowest price-to-book ratios) actually beats buying risky “growth” stocks over the long run. Amazing!
In reality, buying “boring businesses” at cheap values is where you make your money over the long run.
And stocks aren’t the only place you can get higher returns by taking LESS RISK.
Here’s another example…
Investors are disgusted by the returns they’re making on their cash… generally less than 1% at the bank.
So they are stretching outside of their comfort zones. And they’re putting themselves in danger… like buying junk bonds, just because they’re paying 8% interest… not fully understanding that they’re risking a serious blow to their principal if something goes wrong.
As recently as 2002, investors collected 14%-plus in interest on junk bonds… Now, that was a risk worth taking!
But today, you make less than 4% above Treasury bonds in junk bonds, with the threat of disaster always looming. Bond defaults could increase, and interest rates on these bonds could rise. You could actually lose money in these…
Just one example of how risky assets are expensive right now…
Meanwhile, boring government bonds are paying about 4.5% interest. And nobody wants ‘em. Nobody anywhere…
The pros hate safe investments like government bonds. According to a recent Merrill Lynch survey, only 6% of fund managers think global bond markets are undervalued. And as the Investment U Strategy shows: When everyone hates an asset, it’s generally a good time to start acquiring it.
Three Safe Investment Tips from Bond King Bill Gross
Another essential part of the Investment U approach is using timely ideas from Big Money mavericks such as Bill Gross, the California bond guru who oversees the PIMCO fund – and more than $400 billion in assets.
Gross predicted in April 2004 that bond investors were probably “staring 2% returns in the face” for the next four to five years. But as we told Investment U readers, there are two bond investments Gross likes in spite of these tough bond conditions:
1) Own some inflation-protection bonds. For his bond funds, Bill has been buying TIPS, which are inflation-protected Treasury bonds.
2) Stay with short-maturity bonds. While long-dated bonds can fluctuate wildly in price, short-term safe investments like bank CDs won’t. You won’t make much, but you won’t lose anything either.
Yes, Gross is bearish on bonds. But remember what we said about buying an asset when nobody wants it: that’s where the real profit potential lies. And that means some safe investments are so extraordinarily cheap that they’re poised to return triple digits, beating stocks over the next five years…
Investing In Gold and Gold Coins: “Financial Catastrophe Insurance”
With no crisis for over a decade now, one investment has fallen by about 70% from its 1989 peak. Right now, it’s dirt-cheap.
This investment has had three major bull markets since the 1970s… up 348%, 1,195%, and 665%.
And that’s why we call it “financial catastrophe insurance.”
The safe play is in gold investments - and gold coins, in particular.
Investment U President Dr. Steve Sjuggerud talks regularly with Burt Blumert in Burlingame, CA, just outside of San Francisco.
And he agrees with Burt: By holding some gold coins, you’ll be holding a portion of your wealth in a form with intrinsic value. Not to mention, you’ll be buying gold coins at one of the cheapest times in history, where we could see a 100% return on investment in the next five years.
The Investment U System advocates holding 5% or more of your investment dollars in gold-related investments, including gold coins… Gold is a safe investment providing stability against catastrophe in the markets, and a hedge against instability in fiat currencies (such as the U.S. dollar, which has no underlying asset to back it up).
Consider diversifying a bit of your wealth into gold coins. In a few years time, you’ll be very glad you did.
A System That Makes Every Investment a Safe Investment
Along with specific safe investments, the Investment U System gives you a tool for making every investment a “safe investment” – the trailing stop strategy.
The biggest killer to a portfolio is a “catastrophic loss.” If a stock falls 90%, it has to rise by 900% to get you back to where you were. You never want to be in this position.
The best rule of thumb we’ve found is to use a 25% trailing stop. That way, you’ll never have a catastrophic loss…
The concept of a “stop” is simple. If a stock you own falls by 25%, you get out, and “stop” your pain.
The best example I’ve experienced with this is JDSU in 1999 – the stock rose 1,200%, surpassing $140 a share, before it tumbled straight down. Today the stock is lower than where it began, trading for around $3 a share. Many investors lost their shirts. But our readers got out with a 900% profit – because we sold as soon as the stock fell 25% off its high.
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