The important thing is to not put all of your wealth into one thing. Have some cash (especially in your wallet or home). Have some gold and silver. Have some bitcoin. There are different circumstances where different ones will benefit you more than others. Having all prepares you for all of those circumstances.
Normally I would say to also have some stocks and bonds, but right now stocks are overvalued more than they have ever been and with inflation and business failures, bonds are questionable for even maintaining principle.
I know people who have gone all in on bitcoin. They are doing well right now, but there are situations, like the EMP or China's digital ID to access the internet, that could make that dangerous, so even though I am bullish, I wouldn't put everything in Bitcoin. I am even thinking of pausing buying. I had been putting a small portion of each paycheck into Bitcoin.
Well said - and if I had a paycheck, maybe I would have kept putting a little into bitcoin - but as I said, my main concern (at age 83) is preservation of capital. As for bonds, they would do OK in a crash, but are a terrible long term investment - guaranteed to lose value due to inflation. Stocks indexes are very high, but there are always some good solid companies that are reasonably priced and pay a good dividend. They'll still be around even after a market crash, and they pay you while you wait for recovery. Sectors are important, too - like energy. I'll use EOG (Enron Oil & Gas) as an example. Low P/E only 11.9, dividend 2.93, strong free cash flow, return on assets, return on equity, low debt, and very healthy profit margin.
The problem with bonds is if you need the bond before maturity and the rates have gone up, you don't even get back your principle. Short term bonds (< 1 year) aren't too bad.
Yes, rate risk is one problem with bonds. They're thought of as very low risk, but actually, as I said, they're a guaranteed way to lose purchasing power, except during a depression when rates go down temporarily. Imagine loaning $1000 to the government (that's what you're doing when buying a bond) for 15 or 20 or 30 years. Assuming the government is still solvent and they pay you back, even if inflation held steady at a low 2.9% (very unlikely), that $1000 will only be worth $550 (in today's dollars) in 15 years, $400 in 20 years, or $100 in 30 years. If inflation goes up,say 5%, $1000 bond today would only be worth $250 in 15 years.
Raising six kids, we never had anything left even for savings, but we did always have enough for food and shelter.
The important thing is to not put all of your wealth into one thing. Have some cash (especially in your wallet or home). Have some gold and silver. Have some bitcoin. There are different circumstances where different ones will benefit you more than others. Having all prepares you for all of those circumstances.
Normally I would say to also have some stocks and bonds, but right now stocks are overvalued more than they have ever been and with inflation and business failures, bonds are questionable for even maintaining principle.
I know people who have gone all in on bitcoin. They are doing well right now, but there are situations, like the EMP or China's digital ID to access the internet, that could make that dangerous, so even though I am bullish, I wouldn't put everything in Bitcoin. I am even thinking of pausing buying. I had been putting a small portion of each paycheck into Bitcoin.
Well said - and if I had a paycheck, maybe I would have kept putting a little into bitcoin - but as I said, my main concern (at age 83) is preservation of capital. As for bonds, they would do OK in a crash, but are a terrible long term investment - guaranteed to lose value due to inflation. Stocks indexes are very high, but there are always some good solid companies that are reasonably priced and pay a good dividend. They'll still be around even after a market crash, and they pay you while you wait for recovery. Sectors are important, too - like energy. I'll use EOG (Enron Oil & Gas) as an example. Low P/E only 11.9, dividend 2.93, strong free cash flow, return on assets, return on equity, low debt, and very healthy profit margin.
The problem with bonds is if you need the bond before maturity and the rates have gone up, you don't even get back your principle. Short term bonds (< 1 year) aren't too bad.
Yes, rate risk is one problem with bonds. They're thought of as very low risk, but actually, as I said, they're a guaranteed way to lose purchasing power, except during a depression when rates go down temporarily. Imagine loaning $1000 to the government (that's what you're doing when buying a bond) for 15 or 20 or 30 years. Assuming the government is still solvent and they pay you back, even if inflation held steady at a low 2.9% (very unlikely), that $1000 will only be worth $550 (in today's dollars) in 15 years, $400 in 20 years, or $100 in 30 years. If inflation goes up,say 5%, $1000 bond today would only be worth $250 in 15 years.