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Treasuries – bonds issued by our government – have also had quite a run as investors have fled to safety. If interest rates go down, the value of the underlying note goes up. Interest rates are incredibly low right now. How much lower can they go?

Even if you hold it in cash, savings accounts are paying a paltry amount of interest right now. It would take you about 144 years to double your money on a 1-year CD, given the best rates posted on Bankrate.com. We don’t know about you, but we’re not sure we’ll live that long!

We’re looking at generalities here. You should discuss your specific situation with your financial planner. But our point is that it’s hard to look into the future right now and see an obvious place to put your money.

As we were talking about this, we realized there are some good places to put your money, even now.

Your own debt

If you have any debt, you can earn a decent return by paying it down. Let’s say you have a car loan on which you’re paying 6% interest. You can earn a guaranteed 6% per year return by paying it off. That’s pretty hard to beat right now.

Of course, if you have credit card debt, your returns may be as high as 30%!

Durable goods

You can still get a good deal on durable goods. Think cars, appliances and those sorts of things.

Some dealers are still hungry, although not as much as they were six months to a year ago. So you may be able to strike a good deal by buying a little bit prematurely.

Non-perishables

Think canned goods, household supplies and such. If you see something that you regularly use priced at half its normal cost – and you know it doesn’t go on sale very often – you can get a good return by stocking up.

Energy-efficiency

This is one of the few outlays you can make that will pay you back month-after-month. For example, if you have inefficient windows, you can seal up your home better by replacing them.

Energy prices are relatively low right now compared to what we will probably see in the years ahead. So getting a good deal now may very well give you a decent return.

These are good places to invest. But we haven’t discussed the best place to invest right now.

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Yourself

Invest in yourself! It’s the best place to invest now. Does that surprise you?

You may invest in more education that you know will make you more marketable in the future. Your investment of time and money may pay handsome dividends.

You may make a lateral move to beef up your resume or invest a little extra time to learn a new skill related to your current work. 

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That’s how I learned to do audio production. When I was in the early years of my career in radio, after I got done with my on-air shift, I would go into the production room – where the commercials were being made – and soak up all the information I could get. The only investment on my part was my time, but I have to tell you, it continues paying dividends to this day!

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If it weren’t for that, The Bigg Success Show may have never happened!

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You may want to dip your toes in the entrepreneurial waters, even just part time.

• First, you may invest time – and perhaps some money – to hone up the skills required to run a business.

• Then, you may invest money in samples of the product you want to sell and test it with potential customers.

• Next, you may make a small investment in the infrastructure of the business (e.g. a web site) to see if you can attract enough customers to make it worth your while.

• By keeping your costs low while you test a concept, you’ll be able to keep testing them until you find one that makes you money.

Invest in yourself – it’s the best investment you can make right now. Let’s face it – it’s the best investment you can ever make at any time because it leads to bigg success!

What are you doing to invest in yourself? 

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00525-112409.mp3

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How to Weather Financial Climate Change

The Recipe for Life on Your Own Terms

(Image in today's post by svilen001)

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We hear a lot about climate change and its implications. It occurred to us that financial markets change much like the weather.

So here are 4 tips for weathering financial climate change:

Asset prices heat up and cool down

Stock prices skyrocket. Then they fall.

Real estate prices rise. Then the bubble bursts.

Nothing goes up linearly. Yet most of our projections do. Plan for all weather – diversify.

You won’t create much wealth without taking some risk. But you can manage that risk by investing across asset classes (e.g. stocks, bonds) and within asset classes (large cap, mid-cap and small cap stocks).

Price movements can be extreme

Experts are predicting more volatility in the years ahead. We don’t mind it when prices are rising quickly. But we have to be prepared for the other side as well.

Very, very few people successfully time the market period after period. So it’s important to move your money to less risky assets as you near the date when you’ll need it. If you’ll need it in less than ten years, you may want to look at shifting money to something less risky.

As we always say, talk with your financial planner about your specific situation to determine your best move.

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Watch your emissions

By emissions, we mean money out the door. In our businesses and in our personal lives, it’s much easier to spend less than to make more.

When you’re getting ready to spend it, think about how many hours you have to work to earn the money in the first place. If you really want an accurate picture, do this on an after-tax basis.

Make the green house effect work for you

When you’re buying a house, ask some important questions. Do you really need that extra room? How often will you use it?

You may decide to buy a smaller house and invest the “green” to further diversify your portfolio and increase your returns.

Also, invest your “green” in energy efficiency. Improving the efficiency of your home pays you back month after month by lowering your utility bills. You can’t say that about most outlays.

Take these four tips and go green to build a sustainable future for yourself. That’s bigg success!

How are you weathering financial climate change?
Share that with us by leaving a comment, e-mailing us at bigginfo@biggsuccess.com or leaving a voice mail at 888.455.BIGG (2444).

Thank you much for visiting us today. Next time, we’ll discuss a positively fantastic way to improve your bottom line. Please join us. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00496-100709.mp3

Related posts

A Trick to Manage Risk

Think Like an Entrepreneur 

(Image in today's post from tome123)

The basic idea is to take out a Home Equity Line of Credit (HELOC) with your chosen bank. You use this account like your primary checking account. You will pay all of your bills out of this account and deposit all of your income into it. Any left over money goes to pay off your mortgage.

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The benefit is appealing – you may pay off your 30-year mortgage in as little as 10 years. Of course, if you have any other debt (e.g. credit card debt or car loan), it’s almost certain you should pay that off first.

We’re talking in generalities here; you and your financial planner can determine your best financial move based on your specific situation.

The pluses

We liked that the program we looked at included a great visual that showed you the exact month and year your mortgage would be paid off if you stuck with it. We also liked that you could easily see your money coming in and going out.

Using intuition

The example showed a rate of 6% on the first mortgage and an 8.6% rate on the HELOC. Intuitively, it didn’t make sense to us to borrow at 8.6% to pay down a 6% loan.

So we decided to do some calculations to see if our intuition was right.

New vs. old

We decided to compare this new way of paying down a mortgage to the oldest of the old ways – including an additional amount with each regularly-scheduled payment.

The example we looked at was for a couple who made $5,000 a month and had bills totaling $4,000 each month. They held a $200,000 mortgage, with a 30-year term, and an annual interest cost of 6%.

The main driver – with the old way or the new way – was the $1,000 in discretionary money each month. The new program also accessed the HELOC in the first or second month, but once again that money is being paid back at 8.6% instead of 6%.

Apples to oranges

We found that the new program lived up to its promise – you will pay less in interest over a 30-year period. The problem is that it’s an apples-to-oranges comparison.

Their basic assumption is that you will use ALL of the $1,000 in discretionary money each month to pay down your mortgage if you are on their program. If not, you won’t use ANY of it – that is, you won’t pay down your mortgage OR invest it.

Apples to apples

So we decided to do our own comparison. We used the simple, old, do-it-yourself extra mortgage payments method – we added the $1,000 of discretionary income to our monthly mortgage payment.

The result?

We paid off all of our debt (which consisted of only a first mortgage) eleven months faster than they paid off theirs (which included the first mortgage and the HELOC)!

We found some of the assumptions about the timing of income and expenses questionable. With a more conservative approach, we would actually pay off all of our debt fourteen months faster using our old-fashioned strategy.

As for total interest savings, we would save between $10,989 and $24,210, depending on the timing of income and expenses discussed in the previous paragraph. This takes into account the cost of their software as well as a small annual fee on the HELOC.

Conclusions

In a strictly financial sense, the old-fashioned way is your best bet. However, it’s important to also consider the human side.

That’s where programs like this come into play – some people would be more likely to pay off a mortgage early because they could track their progress so easily.

Of course, you could set up one account yourself. With basic spreadsheet skills, you could set up a chart (or talk a friend into doing it for you) to show the effect of additional mortgage payments.

The bottom line – the old way is the better way if you’re looking to save the most money. But if you’re a little light on financial discipline, programs like this may be helpful.

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Next time, we’ll discuss a resource that great athletes wouldn’t do without … and neither should you. Until then, here’s to your bigg success!

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Related posts

9 Questions to Answer Before You Make Extra Mortgage Payments 

(Image by svilen001)