Are Your Savings Losing Value?

Where are people suppose to

invest their savings?

Where can people invest their money safely?

Where can people’s money be secure?

“There aren’t many safe places to invest

your money … if any.”

Contrary to popular thinking, there never really was a

secure place to invest your money that pays a fairly

decent return.

The only real safe investment is a Guaranteed Investment Certificate (GIC), and lately that type of investment has not been paying very much.

What about the people who are looking to save for their retirement but they aren’t there yet?

People are hoping to put their money in some type of registered account (RRSP, or

TFSA) and invest it in a high yield investment.

If the investment is a GIC and it’s only paying 2%,

there’s not a lot of wealth accumulation happening.

With that type of return, people are barely keeping

ahead of inflation plus there are income taxes that have

to be paid.

For example, let’s say John is able to put aside $500 a month in his RRSP and that

money is invested into a GIC account at 2%.

After a year, each monthly contribution of $500 is only worth $510.

Even with compound interest, it’s going to take a long time to create wealth while earning only 2%, even

if the tax is deferred.

Tax is deferred when interest is being earned

inside a registered account.

If you are investing in a GIC outside of a

registered account, the return is even worse.

So John continues to work hard, saves that $500 a month, cuts back

on a lot of pleasures so he can reach his target savings only to find

out he can’t retire because his return is so low.

John’s money is hardly increasing in value

because of the cost of living.

“It’s important to make sure that you save smart

and invest smart.”

There are lots of people working long hours, working double jobs, just so they can

earn enough to make a living.

When people invest their money, they should also

make sure they are investing wisely.

For the longest time, people have been told that mutual funds are

safe. THIS IS NOT TRUE.

“There are much better ways to invest your money

then in mutual funds or stocks and bonds.”

There are a lot of ways that you can invest in Real

Estate that are safe and secure, if done properly.

“Wise investing doesn’t just mean being so risk adverse

that your savings are actually losing money”

It’s time to take back control of your

investments from the big financial institutions.

Now I’m not saying you can’t make better returns

in the stock market.

Most people don’t want to take the time to invest in

the stock market properly.

You have to have a good plan with a good broker and you

need time to make money in the stock market.

Even if you do have a good plan and a good broker, you still don’t have control

over your investment and you aren’t able to respond to any sudden changes in the economy that could grossly affect

your investment.

Inflation could actually eat up your earnings.

The future value of $500 in the last 10 years, adjusted for inflation, is 3.67% x

$500 =$18.35.

That’s not a lot to show for a 10 year return and for all the hard work it took to earn that

$500 in the first place.

There were actually 3 years in the past 10 years where

the investment of 2% didn’t make enough to keep up

with inflation.

“You always have to think of the future value when

looking at your investments, especially with such low

rates of return.”

“An investment strategy based strictly on preservation

of capital does not provide any growth at all.”

Because of inflation, $500 has really only increased by $18.35, even though the actual dollar value of the investment has

risen to about $609.50.

The buying power of the investment is only worth

$518.75 in today’s dollars.

People just look at the value of their investment and think it has risen by

over $100, as is the case in this example.

This type of investment strategy is the equivalent of putting your money under

your mattress.

I’m not sure which is more irresponsible … not

investing your money or investing it into such a low

yield investment.

“There is no difference between someone who can read and someone

who cannot read.”

“If you are not taking responsibility for your

investments and invest them into poor performing

investments, you might as well not invest at all.”

People are so afraid of losing their money because of the

high volatility and poor performance they have seen

in the stock market lately.

There are certainly some considerations depending on

your age and your accumulated savings thus far.

“The older you are and the higher amount of your

savings to date … the more risk adverse you need to be.”

There’s a much easier way to make money outside of the stock market and it’s

very passive.

You have to do your own due diligence as well.

“There are several ways to invest safely in real estate

and yield much higher returns”

Check out my book for a Step by Step approach on how you can get started in Real

Estate Investing.

Real Estate Investing: The 7 Step Solution to Making Millions in Real Estate

Jim Pellerin has been investing in real estate for over 25 years. He is the

author of Real Estate Investing: The 7 Step Solution to Making Millions in Real Estate

Check out his blog at jimpellerin.com