Getting ready for 2012: Insurance? Real estate?

We often emphasize that there is more to investing and building personal wealth than buying shares in companies. Principles of prudent investing are the same no matter what assets you acquire. For our final post in this series, we deal with other assets.

Insurance? IFO doesn’t like insurance.  She knows perfectly well that almost the entire rest of the world does, but she prefers to a) take her chances and b) self-insure. We’ve never had life insurance and just had health insurance for a few years. In the past 50 years we never had a big health disaster and we’re still alive. We realize we lucked out.

Annuities are another kind of insurance. Not all financial advisors, IFO included, like them. Policies are confusing and complicated. We’d rather research companies than try to figure out what is going on in an insurance policy. We do have liability, auto and fire insurance – under protest. This is insurance against what SOMEONE ELSE might try to do to you and your finances.

Real estate? If we had studied RE when we were younger, we might be interested. Back in high school we had a boy friend who drove around town evaluating properties, so he’d know what to do when he had investable funds. We were so impressed at his forward-thinking! Sadly, it didn’t occur to us to do that.

Another friend makes his entire living trading RE parcels. He’s not an agent, he just buys and sells. His rule of thumb: never by land that has a toilet on it! He’s had decades of experience, many when he also had a day job, so he got a feel for trends.

Our last piece of advice is always be watching the economy. Read papers. Surf the Net. Talk to friends and local business people, paying attention to trends. When you travel, get a sense of what is going on in the local economy. Read the local papers in the towns you visit.

Commodities? Sophisticated financial instruments? No. See above.

Finally, Enjoy your Life! Attend whatever events give you pleasure – music, drama, sport, museums, whatever. Travel – across the street, across the ocean(s). Remember: Having fun can’t be taxed, confiscated or stolen.

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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