Alternative Investing with No Crop Failure

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Alternative Investing with No Crop Failure

Friday, June 26th, 2009    Subscribe To Our Feed

The way the market has been the last two years it’s time to look at alternative capital investments, like a gardner would.  Traditionally the generic recomendation has been “invest for long term growth” and then you are told to place your investment capital in REITs or some other retail market offering.

What’s not right with that idea?  Most people are rather passive in their investing activity.  By passive I mean that investors place their bets and then hold, kind of like a gardner planting a crop and then waiting for it to bear fruit.

Here is the rub with that action when investing.  A farmer plants the crop kind of speculatively, he tills, plants, waters and fertilizes and then lets nature run its course.  Yet at certain times his garden is vulnerable.  Too much rain or not enough, or a tornado just before maturity can distroy his crop.  But it’s more likely that his investment will bear fruit and get harvested without a serious incident.  So he speculates each season on normalcy.

The stock market does not grow like a crop.  First of all, it may or may not grow.  It is more common that it will surge in one direction and then in the opposite direction on a daily basis.  Speculating this way on your retirement portfolio just doesn’t make sense for a passive investor or for a gardner.  It certainly would for a spot trader because the trader can move in and out of positions as the market fluctuates.  A passive investor can not. His or her job is somewhere else.

In addition, when investing in a market priced asset you are buying retail.  You are buying the full grown garden not the seed.  So there is no built in leverage assuring growth.  That kind of “Let’s try this” approach just doesn’t make sense when your family’s future life style is at risk.

Let’s look at some alternative investing.  There are a variety of investments where you can buy wholesale like a farmer buying seed and expect a continued growth as a gardner would because it is confirmed in writing.

Investing in a mortgage might be one example.  Buyers of paper never buy at face value (retail) they buy at a discount in order to warrant their yield.  The first position mortgage is usually leaning against an alternative asset that is worth at least twenty percent more than the face value of the contract, so the worst that can happen is that you get your investment capital back without gain.

Even if the market goes south you are holding paper that is at least backed by its retail value.  What normally happens is that the mortgagee pays on the loan and then refinances or moves and you get your principal back - of course, all the while, getting a yield on your principle investment.

There are no wild swings in value therefore growing your wealth like a gardner can provide you with consistent growth of your capital alternative without the ups and downs.  This makes much more sense to me than buying into the stocks market where they could be worth less that what you paid for them the very next day.  At least you know whats on the contract upon maturity.

There are many other capital investments where you can get up front leverage, a regular yield and where you are protected on the downside if something goes wrong.
I would consider looking into various other investment options by going to Capital Investments Alternative and looking over what’s there.

If you are a passive investor proceeding more like a gardner makes much more sense.