If you have heard it once you have heard it a million times, the best investing strategy is to buy low and sell high. The problem with this advice is that the normal investor or most investors for that matter have no idea what a low buy and high sell is. Not that they literally do not know which one is lower or higher, but to how low an investment will drop to how high it will rise after being purchased or when being sold.
Timing the market or trying to do so is one of the easiest ways to lose money. You could buy a stock when it is at an all time low, but that does not mean the stock will recover, it could just go bankrupt and there goes your money. Or you could buy a stock and then by chance if the stock then rises say one dollar, well it is higher now do you sell? What if it rises twenty dollars a share, do you sell then? There is no way to know for sure and for the most part the greed and fear in people will cause them to mess up, granted if you did sale at twenty dollars higher than the original price you would make money, but can you keep that up for every investment?
The better plan would be to place your money into an array of stocks and precious metals and then re balance your money every so often. The general plan is that if you have your money diversified in this case in metals such as gold and silver and in different stocks that when one is doing poorly or just normal the other will be doing well or normal as well.
For example if you had placed your money as so described above in the early 90′s you could have bought a variety of stocks and gold/silver when it was really cheap. During the whole 90′s your metals would have not earned to much money if any but stocks would. Then when the 2000′s came around until now- boom loads of money on metals and so so on stocks.
Now the idea to re balance is that in the 90′s when stocks were doing pretty well and metals not so much you would had taken the large amount of money earned in stocks and re distributed it evenly into your metals and stocks. For example you start out with a thousand dollars in gold and in stocks, every year in the 90′s your stocks would double (just an example) and your metals stay about the same. At the end of the first year your portfolio would be a thousand in metals and two thousand in stocks, but when you re balance it would $1,500 for both.
If this went on for a total of say five years in the 90′s you would end with a portfolio of about 7,600 in each metals and stocks. (typically an investor would start with more in each but for the sake of an example I am working with smaller numbers, so if you want you can add a few zero’s.) Now say the year 2000-2002 comes along and stocks begin to slow down and fall, but metals are rising. Thus you would not lose all your money like if it had only been in stocks, you have metals to help balance. Then for the next say 5y ears the stocks and metals follow a life like pattern it would be as stated below. Also with the new money earned by stocks or metals you will buy more of each.
Metals- $7,500 starting in 2000 and Stocks-$ 7,500 starting in 2000 say each year stocks lose $1,000 but metals will earn double. By the year 2006 after re balancing each year your final numbers would be, Metals-$49,000 and Stocks- $49,00. Now remember this is with metals such as gold and silver doubling each year and with that extra money after re balancing with the loss of $1,000 each year in your stocks, and purchasing more metals each time the re balance is over, gold ETFs or bullion itself will work, but if bullion you will have to store the quantity in a bank but not in storage rentals.
Now stated above is just an example but the basic principal holds true, having your portfolio distributed into a variety of investments will help to keep your portfolio making money. The more diversity the better, you could do more than just metals and stocks, you could add in bonds and cash. Just remember to re balance every so often so that if something bad happens to your money maker that the others can even it out and thus keep you ahead at all times.
No body can predict reliably what will be the next money maker in the coming decades, gold, silver, stocks, bonds, or cash. But if you have your money in each then you are more than likely going to be safe no matter what. Make sure to do your home work on your investments and you should do fine, you do not need a degree to invest your money but if you feel more comfortable doing so you can always use a licensed investor.
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