Your Survival Guy was talking with a client this week about a friend of his who recently retired and sold his practice.
“I told him all about you,” he said. Which I thanked him for, of course, and said, “Few have done more for my business than you.” (This individual has referred countless investors to me, and a handful of them are now clients.)
“Guess what he’s doing?” he said.
“What?” I asked.
“He’s investing in mortgages paying him 11%.”
“Good luck with that,” I said.
He continued telling me how all the guy’s friends were doing the same thing. Which made me think about how some investors eventually find their way to me because they got burned by someone else’s “great” investment ideas.
Understand, the real problem here is that this individual no longer has a job. No income other than these below-junk-bond-rated mortgages that tend to be the first to not pay when markets seize up. And if that happens, that money is lost forever. It cannot be made back. The remaining money might be able to get back to even, but not with lost dollars.
Believe me when I write to you about Dick Young’s North Star as the gravity for fixed income investments and the place to begin your thinking. In my conversations with you, you’re telling me about your matured CDs and how new ones pay much less than what you had. There are attractive treasuries out there that are state and local tax-free. You do not have to jump in headfirst, but you can dip a toe in and develop an investment plan.
The truth of the matter when it comes to hiring a fiduciary—an investment field guide—is that it often happens after investors get burned. Don’t let that be you. Investment lessons are taught the easy way or the hard way, but they will be taught.
Action Line: I’m here to help when you’re ready. Email me at ejsmith@yoursurvivalguy.com.
Originally posted on Your Survival Guy.
