“Where Should I Invest My Money?”

By Greg Hunter’s USAWatchdog.comI was a featured guest on the nationwide overnight radio show “Coast to Coast AM” last week.  The show airs on more than 500 radio stations. “Coast to Coast AM” has a huge audience.  So, after my appearance, I was flooded with emails.  Many people who contacted me said they were “scared” of what is happening in the economy and wanted to know what to do with their money to keep it safe.  I want to share a couple of excerpts from the emails with you:

Marjorie wrote, “… we are confused about what to do regarding a new home purchase now.  On the one hand you say the cost of housing should continue to drop, and at the same time you say the new loan coverage of Fannie and Freddie will cause enormous inflation…. How can prices drop at the same time as this runaway inflation is coming?”

(My reply)

“Marjorie,
Thank you for your kind words.  My dad used to say, “What’s the difference
between a $150,000 house at 10% and a $300,000 house at 5%?” (assuming both
houses are identical) Answer:  The payments would be about the same, but the
$150,000 house would be a much better value.  Why?  Because you do not buy
an interest rate, you buy a house.  Interest rates are going up at some point;
and, as rates rise, house prices will drop.  Inflation is not uniform… gas
and food can go up (as they have already) and home prices can go down at the
same time.  (Sound familiar?  This is just what is happening now.)  I don’t
see a bottom in home prices until at least 2012.  Please check out my
favorite chart in “Real Estate at a Bottom?…Not!” There will be plenty of
houses on the market in the future.  Save and invest your money wisely and be patient.  The deals will still be there after 2012 and, I think, at even lower prices than today.

In another email, Dorothy wrote, “Greg, we heard you last night on the Coast-to-Coast radio program…you were brilliant…but we are scared.  What should we do: (1) take savings from C bank and put in A bank (in FL)?  (2) sell investment properties at big  losses now? (3) withdraw IRA/401K monies, despite penalties, and put into precious metals (or where else)? (4) renew annuity coming up? Thank you for your help.”

(My reply)

“Dorothy,

(1) Definitely move your money to the highest rated bank you can.  There is nothing wrong with having some cash right now.  (2) Depends on cash flow and how much you owe on the property.  That said, the real estate market is not coming back for a long time…. You will have to decide what to do on that one.  (3) Talk to your accountant before you withdraw any IRA money so you understand the tax implications ….Please check out a September post titled “Get Out of Debt and Stay out of Debt”, but it is also about hedging.  You cannot
properly hedge yourself while you are in debt.  Also, read “The  Smell of Money Harvesting is in the Air!” There will be another big sell off in stocks and Wall Street will, once again, harvest some of your money.  We have had a very big run up since the March lows of 2009.”

My overall take from the dozens of emails I received from “Coast to Coast AM” listeners is people are scared.  The folks who wrote me also want help in coming up with ways to protect their hard earned money.  I did not get the feeling that anyone was trying to get rich.  The collective masses know there is something big coming but can’t put their finger on it.  One thing is for sure, no country in history has built up this much debt.  This huge debt load permeates the United States:

- The government has tens of trillions of dollars in debt and liability.

- Nearly every state budget is in deficit with more than $200 billion in annual shortfall.

- The public pension system alone is two trillion bucks in the hole.

- The banks still have hundreds of billions of dollars in hidden financial problems.

- The FDIC is broke and is facing hundreds of bank failures in the next few years.

- Residential and commercial real estate is in the tank and sinking deeper.

- We are fighting two very expensive wars abroad.

- And we just added more than $6.2 trillion in liabilities on Christmas Eve last year with Fannie and Freddie. (The Fed bought at least $1.25 trillion in Fannie and Freddie MBS.)

There is something wrong, alright, and people across the country can feel it.  My advice is to plan for the worst and hope for the best.  2010 will be a year of surprises and not the kind you find under the tree at Christmas.

Comments
  1. Brad Thrasher

    A trial balloon currently floating and that may have reached HB Resolution stage by now is to convert pensions to an annuity guaranteed by the U.S. Treasury.

    In real speak, Uncle Sam is preparing/considering to confiscate our pension savings and replace it with an IOU.

    It’s estimated somewhere between 4 to 15 trillion dollars is held in pensions. What gold was in 1933, pension funds are today.

    Before anyone runs out and closes out their 401K or other pension, consider first, where do you go? If your mind just went blank, you have the right answer.

    The single smartest thing everyone can do is begin transitioning your income and assets away from your person and into a corporate form held in a trust. Be it a Subchapter-S, an Inc. an LLC, your tax adviser can help you decide.

    Resistance is futile. You will be assimilated. The only decision left to make is what degree of control each of us will maintain. Get out of all debt. Become self-financing as much as possible.

    Don’t whine about the rules. Use them to your advantage, just like the fat cats do. And maybe, as I do, you might find some solace, keep your faith and hope alive in my favorite quote from Winston Churchill,

    “You can always trust the Americans will do the right thing. After they’ve tried everything else first.”

    • Greg

      Brad,
      Great stuff!
      Greg

  2. George

    Wow..Great article. I knew I was not the only person think things were different than being feed to us via mainstream media.

    • Greg

      George,
      So many people scared! Thanks.
      Greg

  3. Keith

    Brad Thrasher said
    “The single smartest thing everyone can do is begin transitioning your income and assets away from your person and into a corporate form held in a trust. Be it a Subchapter-S, an Inc. an LLC, your tax adviser can help you decide.”
    Corperations are formed to seperate the “owners” assets from liability issues ie lawsuits. How would moving assets into these corperations be a help if they are now accessable in a lawsuit?

    • Greg

      Keith,
      Thank you for the input.
      Greg

  4. Brad Thrasher

    Hi Keith, Sorry for the delay in getting back to you.

    Corporations are formed for many reasons, including shielding personal assets as you mentioned.

    The tax benefits available to corporations far exceed those available to a human person. To protect for an example, a rental property, you separate the asset from the risk (slip and fall) of ownership.

    If necessary you can always bankrupt the “risk” corp and walk away.

    If you asked me if I believe the extent to which we have granted rights to corporations is good law, I would tell you it doesn’t pass the smell test.

    I am a liberal. I just try not to be stupid about it.

    Oh, the reason I found Keith’s post was that I popped back in here to suggest looking at tax free municipal bonds. Could be a great opportunity to buy low and sell high. And remember, nobody ever went broke betting on the USA.

  5. Joe Ginsberg, CCIM

    Hi Greg

    We run an email marketing site specifically for commercial real estate and what we have seen is that more and more people are beginning to advertise their properties for sale at market rates. And the money that has been on the side for a few years now is coming back in to pick up these great deals. Retail sectors are the hottest with land and idustrial sectors still the weekest.

    I like the article, keep up the good work.
    Joe Ginsberg, CCIM

    • Greg

      Joe,
      I cannot see how real estate will do anything but bottom bounce for some time to come but it you are making money more power to ya. Thank you for your professional perspective.
      Greg

  6. Team Roster

    Best you should change the post subject Where Should I Invest My Money? | Greg Hunter’s USAWatchdog to more better for your webpage you create. I liked the post all the same.

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