Investment Advice for Regular People

If you read magazines like Smart Money, Money Magazine or Kiplinger's the financial advice is often geared towards individuals with incomes that are close to six figures. But for those who make half of that, there is no real voice that would lend sound financial counsel as to what a $50,000/yr. working woman should do from an investment perspective when the market is somewhat volatile and real estate is equally stained.

In a previous article, I talked about the possibility of leveraging the recent Federal Reserve rate cut to purchase a second home and use it as an investment vehicle. I admittedly received some comments from some readers who thought that option unobtainable for the common person whose salary would not be able to bear two mortgages with incomes climbing at rates slower than inflation. So what practical investment advice could a common person apply in a market as unstable as the one surrounding us today?

For any individual looking to invest in a market both a short and long term investment outlook is required. While real estate has suffered for the last six months and has yet to bottom out, it is still a viable option for people that can afford it. For those that cannot, the question becomes how to find real estate that can be secured without penning you financially. One real option is to look at developing a real estate club similar to a real estate investment trust. Rather than one individual buying a home, the home could be secured by the club. That will allow the club to shoulder the burden of home ownership together as opposed to a single individual.

For the sake of this article, let's say you and three friends start ABCRE. The goal of the club is to leverage the combined assets while pooling investment risks just the same. To get in, the four of you each put up $5,000 of seed capital. This puts your pool at $20,000 for securing your first home. In today's market, the chances of you finding a solid home are pretty good. With closing costs and everything tallied, you will probably put a solid dent in your initial investment but it will not swallow the total investment whole. Beyond that, for a time of twelve months you each put in only $300 a month for the mortgage note and repairs that will be done by the group. This point is key. Sweat equity will allow you to keep costs down. So paint, trim, and clean yourselves. If you can keep the cabinets and simply change out the countertops make Home Depot your best friend and do it.

Fifteen months after ABCRE purchases the home you put it back on the market and make a 50% return on your market after the market has fully bottomed out and financial institutions begin to move more mortgage loans under stricter but more stable loan programs.

If real estate is not for you, another option to look at is starting a business. With the market so volatile, starting a small business might be a worthy option if buying a new car is not your financial goal. With internet businesses springing up every day the question you have to ask yourself is, what do you do that someone else may be willing to pay for. Or, if you work for a major corporation, what part of your expertise, would small businesses find valuable. For example, if you are in marketing for Proctor and Gamble, you may find yourself starting a small home-based marketing outfit for small businesses. You would be completely internet-based, conducting your meetings during your lunch breaks and on Saturdays. And with the smaller scaled needs of small businesses, you may be able to maintain three or four clients at a time. Since they could never afford their own marketing department, you could become their marketing department, absent the overhead in hiring a staff person. The same can be said for people in technology. Whether it is systems oriented, programming, or web-oriented, your talents and skills are much sought after by smaller businesses and entrepreneurs who need your expertise but could never afford to bring you on board full time. And when you consider that chance of them hiring someone from a temp agency on a project basis is difficult, you would be a wonderful addition to their team.

The startup costs for such a venture would be launching a new website and deciding what services you want to offer. A simple investment idea. But the opportunities are limitless if you work the business right. With the market in the state it is and most Americans unable to make sizable investments, pooling their resources with others or starting their own businesses, may prove to be the wisest investment options that can be made. With the chances of success based on your own work ethic, the sky is the limit for how much money you can earn and how much return on your investment you will say.

But certainly, you will make more than the stock market would offer you.