hypothetical question about what you do AFTER silver spikes or you sell...

ok you got 100 ozs of silver and you decide to sell that at the current price and get $2100 from it as they are ASE's and you found a buyer that bought at a slight premium...

now what kind of investment vehicles are there out there? and assume silver went up $2/oz after you sold so you can't buy back in without a loss...what can you do with $2,100

list as many reasonable options as you know of for actually investing not buy alcohol or smokes or silly things like that...

I'm not asking for advice for myself I'm just looking for what others would do in such a situation...

I can think of stocks, US treasury items, (bonds and notes)a bank CD, and/or a savings account...

please don't look for loop holes in this thread and also keep on track with the OP...too many times a post like this can go sideways and it would be nice to make this a learning post...


Alex

 

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I have been working on an "old school" investment lately. I am trying to pay up my life insurance policy as much as possible, so if I had an extra $2100 I would put it there. The yeild right now is about 4%, while not great it's better than bank interest and insured by my state's insurance fund. I can get my principal back at any time and the earnings are tax free (as long as I don't take them out in cash during my lifetime).

If stocks keep going up I'll probably sell out and maybe start working on a new policy. I am done with stocks forever, after the meltdown, flashcrash, bailouts, ect I'm not putting my money up. Companies are always needing fresh capital because they aren't responsible with the capital they have. I"m sticking with mutual funds because atleast they have sophisticated computers. I'd buy bonds but not right now because I think the bond market is overbought.

 

Proceeds from a silver sale will go back into the stock market.

 

can you be a bit more specific then just stock market? like what stocks? and would it be for stocks that will soar or for dividends?

 

The specific stock(s) depend on what looks good at the time. For me, the energy sector has been my long time favorite. I've made more money from energy stocks in my life than everything else combined. I don't see this changing since worldwide energy demand is almost certain to continue to rise, basically forever.

 

Use the money to pre-pay your mortgage. Assuming you own a home and have a mortgage, and there's no pre-payment penalty, you can make a significant difference in the amount of interest you'll pay over the life of the loan. Plus you build some extra equity in your home for when you sell. If you want to take it a step further, after you used the $2100 as the initial pay-down, make it a habit to pay an extra $150/month against the principle.
Over the life of the loan on a $200,000 mortgage at 5.5%, you'll save literally thousands of dollars in interest payments.

 

With 2k your investment potential is limited but you can start an investment portfolio with it now. Your option could be a low or mid cap mutual fund that's broken up in home in foreign companies. When I started investing I was 15 and my pockets where limited at 2k so I bought into 2 mutual funds which had a 1k minimum deposit each. after which I added 50$ in each fund every month. After a few year and the odd fat-deposit I found myself with a portfolio that had a fighting chance in the stock market.

So with a sum of 2000$-3000 I would advise you to only meddle in mutual funds , poor man stocks

 

If you have any consumer credit - I'd pay that first - looking for something outside mainstream - an investment based in rare earth minerals.

 

Start a ROTH IRA

 

What would I do with $2100? Simple....I`d be buying either silver, gold or possibly palladium......But all sarcasm aside.....I would avoid anything that is retail and financial and look at companies that are involved in water purification systems. Another company I like is Ford. They have rebounded excellent, and I know many people who are impressed with their cars. I like their marketing campaigns compared to other automotive manufacturers. It has also helped Ford`s cause when they turned down the bailout money. I like the direction they`re headed in.

Personally I`m staying as far away from Wall street as I can though. If I were a legitimate day trader there would be money to be made....but I`m not. I`m sticking with the PMs and not looking back.

 

Personally, with only $2100, I would avoid individual stocks (unless you already have a fairly significant basket of individual stocks). Like others have said it all depends on your risk tollerance what you would be looking to invest in. My time horizon is roughly 30 to 40 years, so I am looking for growth and can take and I am not afraid of high levels of risk. Personally, I like products from Vanguard and Fidelity (since they have really low fees). However, I'm not sure either of them has any funds that don't take a minimum initial investment of $3000, so they would be a little out of the question.

I really like RhinoEmpire's suggestion of a ROTH IRA. I am a big fan of them since I worry about extremely high tax rates in the future. Of course no one has a crystal ball and there is a chance the withdrawals won't be tax free on them in the future, but I am willing to take that risk.

Race also brings up a good point about pre-paying your mortgage. If you don't think you can earn more than 5.5% in your investment portfolio, this is a great idea.

 

I presume that you sold your Silver because you felt it was over priced. If that is true then didn't you expect the price to come down? To what and when? Maybe you should just wait...

What has caused you to change your assumptions? The spike in price in PM?

What do you expect to happen in the future? Invest in what YOU believe in. No one on this board knows what will happen in the future any better then you do.

If you have recently changed your mind and believe that Silver has the best possible appreciation potential in the future than buy Silver.

All you can ever do is make investment decisions which make sense at the time you make the commitment. Forget about profits/ losses from past decisions. They are over with and should have no bearing on your current decisions.

In general everyone participating on THIS board believes in PM, which is why they are ON this board. Not an objective group to ask for advice.

 

That is true....But, there are many people in this group who are currently into either Wall street, or other investments as well. Some are more diversified than others. Even though I`m currently a non resident on Wall street, I still follow the markets feverishly.

 

Hilarious.

So you made a "killing" - a.k.a. 20% gain and now what the HE LL to do with the money.

Priceless.

 

thanks for trolling and btw do you really think money put into pms should always stay in silver or other pms? I always thought things changed, being certain investment vehicles become a better investment then others...I'm not saying I am selling nor planning on selling...I'm just asking a question about other investments out there and so far I think this question has brought about some nice answers and good information that most ppl that don't know much about investing would realize or know too much about...

sometimes the stupid question is the one not asked...so please don't troll here...

Alex

p.s. if I were planning on selling and reinvesting isn't it a good idea to see what is out there? I realize that anyone can post anything on here and so I and others will and do always take it with a grain of salt...I think it's always good to trust but verify...

 

Not that you could do it with $2100 but I think real-estate is a good place now. Not just buying up land but going more the route of getting a single family home or duplex to rent out. More work than the stock market of course, but if you buy in at the right price and screen tenants well then it can pay off nice.

 

A) Au and Ag are money --- real money
1) Pay off/down debt
consumer & liability first (credit cards, vehicles etc)
asset based debt (mortgage) although that thought process has changed
2) exchange tangible assests for tangible assests

question...
why exchange money that is increasing against FIAT that is falling?

 

Answer: Because you need fiat money to purchase stocks, real estate, or goods/services that you may want or need.

 

For stocks, it depends on what sector is attractive to you. I like RTP, the largest iron ore miner in the world, and mines other minerals. I like gambling stocks with exposure to China, and I like a few financial stocks that have been beaten down.

Problem with $2100 is that you do not have enough to diversify. You could only economically afford to own 1 or 2 stocks, which is riskier. In that case, look at buying a low fee mutual fund in a market segment attractive to you. I think primary metals isn't bad, and will go up with a recovery, as well as international, especially some sectors in Europe.

Just for disclosure, I own stocks I listed or referred to above, just a few thousand shares though, not a large position.

 

Also, exchanging silver for stocks is exchanging hard asset for hard asset. Stocks are ownership of the company, many of which have substantial hard assets and some even that produce your "real money".