Savings & Investment, Smart Spending

Small Investors Should “Bank” on Risks

Are you broke? If so, why not?

A small joke, of course, because you are probably not….or at least I hope not.

But consider a new survey and what it might mean to you as a small investor.

The survey comes from, a personal favorite because of their timely questions (though I don’t always agree on their answers).

On the one hand, consumer confidence is on the upswing, but the “broke” side of this coin is that the average American owes about $47,000 in debt. If you wonder why, the site has the answers. This is something you might want to know.

No. 3 of five reasons is inflation. Now our federal government tells me inflation is low, but if you live on any kind of fixed income, you know this is untrue, shall we say. The pernicious (look the word up) impact of inflation on countries has been well documented and explains why the government does not want you to think we have the disease.

Other debt reasons include a lack of financial literacy education, no emergency savings, increasingly convenient payment methods and large long-term loans.

That sounds like a pretty convincing laundry list of why this is happening

But the site also has some suggestions for liquidating that debt.

Save your money.

Just about everyone says this, of course, but GoBanking is more specific. They say the key is to automatic divert money to a savings account. That’s saving with no effort or thought because the money is gone before you know it.

Here’s where I part company with the notion, however.

There’s nothing wrong and a lot of things right about compiling a savings account. It’s like a good diet and regular exercise. We all should do it. But we don’t, of course.

The implication here is that consumers should put their money in an anemic interest-paying bank account. We all know how little that pays (which is probably the major reason so few consumers do it),

My own suggestion is to put money aside in some other account that you absolutely, positively refuse to touch, and let it accumulate. Then, invest it in income-producing ways such as real estate, of course.

That is a system that is unlike a bank account in that there are no guarantees of what you do with the money. But with some risk, there are rewards when you make the right decisions of how to invest your funds.

As a presumably savvy small investor, you probably know by now that it’s extremely difficult to invest in real estate with borrowed money. You need cash in these times for many reasons, including the flexibility of buying what and when you want it.

But in addition to financial issues, risking a better return on your money is placing a bet on yourself. You are taking control of your own fate. And wouldn’t you rather do that instead of even the surest safe bet?