I was reading the Wall St. Journal yesterday and I came across this ad for Ally Bank. Is this crazy or what?
They are bragging about 1.00% interest on your money because that is how low rates are nowadays. I know this doesn’t come as a surprise to any of you, but I feel we have all become immune. I really feel bad for our savers out there who are or have been in retirement, expecting to get some low risk interest for being a saver.
Timing is everything in life. Selling your house in 2005 and renting for a while would have been good timing. We could of course name example after example but I am sure you have plenty of your own.
What about this little doozy? Investors are now paying to lend Germany money. You almost have to read that twice and then stop and think about it. That’s right, when you buy German bonds they come with a 0.08% negative yield.
That is how careful big investors are being and how much they want to believe these assets are truly safe.
It reminds me of the type of investor that tells me, “Oh, 11% is too big of a return so it must be really risky.”
I have always wanted to say, “Not to worry I can knock it down to say… 5%, so it will be really safe.” Heck, maybe my new line is going to be, “Why don’t you pay me 0.08% so it will be quadruple safe.”
Of course, I still hear the other side as well, that 11% isn’t enough. That is the way it goes. We are all different when it comes to risk tolerance while investing, but are we logical? Of course not. We are humans. We do everything with feelings and emotions and justify our decisions with logic. We tell ourselves we don’t do this, but we do. Have you invested with someone you can’t stand to even look at, let alone be in the same room with?
I highly doubt it, and if you answered yes to that question you are one in a million. He or she could be the smartest person and have the greatest product, but if we don’t feel good about him or her, it rarely happens.
I have learned so much being part of the alternative investment space over the last 8 years. It has opened my eyes to opportunities that we so rarely get exposed to on a regular basis. None of them come without risks, but that must be measured against return. As I talk about in my book, Excess Returns, that is what we should be searching for with a portion of portfolio.
Find those investments that pose a minimal amount of risk, but with higher returns. Find that spread between risk and reward. The best ones produce excess returns, or more return than what the true risk is in the exchange. These types of investments are out there and waiting for you.
As much as I would like it if our alternative investments were for everyone, they are not. If you ever want to talk about what I have learned about alternative investments over the years, give me a call, send me an email, or attend one of our casual dinners. I am glad to share, probably to the point where your eyes glaze over… but you can always change the subject!