Investing for the future is a large part of the American Dream. Savvy use of our hard earned cash gives us the power and freedom to use that money in the ways we see fit. When you consider the sobering fact that you could be retired for as long as 30 years, it puts the need for robust investments into crystal clear perspective.
Here’s a look at some excellent investments that could dramatically change your financial picture, and pay big dividends in the future.
Invest in your Debt
You may not consider this a sexy investment, but getting rid of your debt will actually free up a big portion of your money, particularly if you have a mortgage, a couple of car payments, and a few high-interest credit cards.
Did you know that you can pay off your mortgage in half the time in one very simple and affordable step? Each month, when you write that mortgage check, write a second check for the principle-only portion of the following month’s payment.
Remember, the lion’s share of your mortgage in the first ten years is primarily payments against the interest. If you have a $300,000 mortgage at five percent interest, your monthly payment for 30 years will be fixed at around $1,610. Your very first payment will apply $1,250 to the interest and $360 to the principle. Your next month’s principle payment will be $362. By adding in this amount with your first month’s mortgage payment, you’ve actually paid two months and saved $1,248 in interest.
If you can do this each month you will literally pay your mortgage in full in just 15 years, and will have saved well over $100,000 in interest. This is a very savvy investment and in just 15 years will free up more than $1,600 each month, and that’s money you can reinvest elsewhere, and your home will be all yours!
Invest in Yourself
Along the same lines as investing in your debt and clearing out all those unnecessary interest payments, investing in yourself is one of the single best investments you’ll ever make.
If you do not have a high school diploma, don’t have a trust fund, and aren’t a genius with lots of patents, you can expect to live in poverty throughout your working years, and living on a skimpy, fixed income in your senior years.
Getting a college degree will not only give you more opportunities for employment and investment, it can also triple your annual income compared to someone without a high school diploma. If for no other reason than to earn more money, investing in a college education will almost certainly improve your lot in life and give you more discretionary income, which means you can find other investment opportunities in an employer-matched 401(k) or monthly bond investments.
Add an advanced degree in a specialized field and you can essentially write your own roadmap. Advanced college degrees in law, medicine, business management, computer sciences, engineering, and economics can have you on a fast track to financial success, untold investment opportunities, and access to similarly situated colleagues, which could result in unexpected dividends.
Education is the key to everything great you want to accomplish in your lifetime. Investing in yourself is easily the smartest investment on this list.
Land
Land will always be one of the best investments you can ever make, and the reasons for this are logical and simple. For starters, there’s a finite amount of it on the planet, and when it’s all been used for some purpose or another it will all be gone. In principle it’s the same as purchasing an Imperial Fabergé egg. There were only 50 ever made, and of them only 42 exist. Their rarity is the key to their extraordinary value.
Any piece of land, eventually, will be worth more than the original price because someone will want it for any of a thousand different reasons; a freeway here, a shopping mall there, a single-family housing development elsewhere. If you own it then those who want it will have to come to you with an offer. This puts you in the driver’s seat and in total control of your investment.
Farmland is a particularly good investment for a variety of reasons. Food prices continue to increase, as does the population of the world. Agricultural farming is the truest form of supply and demand economics. A farmland investment could create excellent monthly rental income, or huge capital appreciation if it can be held onto long enough.
U.S. Bond Market
The U.S. bond market outperformed some of the most reliable investments, including gold, in 2011, and the forecast for 2012 is more of the same. In 2011, the U.S. bond market returned an average of 13.7 percent on investments, which means it out-paced the stock market. The best performing bonds, the 30-year Treasury bond, returned 35 percent.
Bonds are very easy to purchase, including through your bank, broker, or dealer, and can be purchased any time you desire. Many people purchase one or more each month, repeating the monthly ritual for years. When the bonds mature, in five-, seven-, 10-, or even 30-years, they can be cashed out or re-invested.
U.S. Treasury bonds come in many different forms, amounts, and durations and a plan to purchase them should be formulated with your banker or other investment professional. They can be an excellent source of future income and should be seriously considered, particularly in this economy.
Classic Cars
You may be surprised to learn that investing in classic cars is an investment strategy that can return an excellent return on your income. One of the primary reasons for this is a true classic car tends to gain in value year in and year out. Another reason is there’s never a shortage of buyers and ways to sell your car, should you choose to do so at some future point.
One particularly strategy, if followed, can increase the likelihood of a sound investment. Invest in a car that is already a classic. This may sound obvious, but you’d be surprised how many people pass on a legit classic because they’re certain the car they really like will eventually become a classic.
There’s no guarantee any car will become a classic until it becomes one. If you like Ford Mustangs, then choosing a 1969 Boss 302 makes much more sense than purchasing a 1999 Mustang convertible in the hopes that one day it will become classic.
When it comes to investing in classic cars, speculating that such and such vehicle will eventually be worth a bundle can cost you your entire nest egg. Do your homework and choose a bona fide classic and stick with it. You’ll be happy you did.
With any investment of your own money, consult a certified financial planner or equivalent to guide and direct your investments, to suggest strategies, and to help stay on top of your ever-changing situation and life goals.
Taggart writes for CableTV.com, check them out for XFINITY Internet Deals. In his free time he writes about his three main passions: business, technology, and finance. You can follow him on Twitter: @CableTVcom.