My father created wealth through his business and real-estate investments with cash flow property rentals. Unfortunately at a young age my father fell ill, both mentally and physically and I never got the opportunity to have an in-depth conversation with him about his investments.
With my father becoming handicap, my mother took over handling the money and she would always tell me “the safest way to grow your money is to put it in the bank”. See, my mother was more conservative when it came to money and she invested very carefully in stocks that were low risk and suggested by her banker. Now, lets put my mothers (and the bankers) suggestion into perspective; with today’s inflation rate of 2% and interest rates being 1%, my money is losing it’s value by 1%. This is not an investment that looks appealing to me.
In 1992, the Japanese economy crashed and my parents lost a lot of money on their investments. I remember my mother telling me about how little their property values were compared to what they paid for them and yet they were still creating cash flow from their rentals. The biggest lost from the economy crash ended up coming from their “low risk” stocks, the same stocks that are suggested to millions each day by bankers.
Now, low risk is great and it just depends on where the low risk is. Like for instance, the low risk in investment opportunities that are backed by real estate. According to the http://www.globalpropertyguide.com, their chart shows that even when housing prices are down the rent prices were either stable or growing in the history of the housing market since the year 2000-2012. On top of that, unlike investing in the stock market, when you investing in something tangible you will never lose 100% of it’s values. Just some food for thought.
