Thursday, 2 June 2011

On becoming a rational investor (Part 5 of 9)

Real estate
and gold coins may be great investments during inflationary periods, but tend to be lousy places for your money when the curve turns and prices begin to fall. You certainly don't want to be caught with a huge mortgage at a fixed rate of 8% when the price of residential properties has fallen by 20% and you can borrow money at 3%.

It is up to you in each case to take sensible measures to profit from the situation or, at least, to minimize its negative consequences. As individuals, our best strategy consists of letting go of anxiety and viewing inflation, deflation, or unemployment just as problems to be handled.

To be continued in the next post.


[Image by Paul Albertella under Creative Commons Attribution License. See the license terms under]