Most people know that the keys to financial security are to work hard, control expenses, and invest wisely.

The first two are pretty straightforward. But, when it comes to investing, many of us are understandably confused. Largely, this is due to the overwhelming amount of information (and misinformation) that’s available these days.

Luckily, it doesn’t have to be that way. In this post, we’ll look at five approaches to investing and consider their benefits and risks. We’ll focus especially on investing in vacation rental properties, which is widely considered the best type of investment for the average person.

Please note: the information in this post is not intended to replace professional financial advice. We recommend consulting a qualified investment counselor before putting your money into any opportunity.

Are Stocks a Good Investment?

Investing in stocks is always popular; and some people have made billions of dollars this way. But investing in the stock market has a number of disadvantages. Here’s why:

Stocks are complex – – investing in them successfully takes a fair degree of specialized knowledge. For example, arch-investor Warren Buffett talks a lot about the importance of “analyzing optimization and opportunity costs,” an economic skill that relies on fairly advanced mathematics.

Stocks are risky – – to see what we mean, consider that more than 600 publicly traded companies declared bankruptcy in 2020 alone. There’s no way to know when a pandemic, a recession, or simple mismanagement can drive a stock-issuing company into ruin.

Stocks are the domain of billionaires – – which is why so many people are intimidated by the market. Making money means matching your wits against people who have made fortunes by taking big risks. For most of us, that’s a disturbing prospect.

Are Bonds a Good Investment?

The answer is “yes,” if your primary concern is avoiding risk. For example, US savings bonds are backed by the federal government, so it would take a widespread societal collapse for them to become worthless.

On the other hand, bonds are notorious for offering low returns. For example, Series EE government bonds, which are the least costly, pay as little as 1% per year.

Not only that, but getting your money’s worth from a Series EE bond means holding onto it for at least 30 years. This leads to a second drawback to investing in bonds: their illiquidity. In other words, they’re hard to sell in the event that you need cold, hard cash.

It’s true that many professional investors flee to bonds whenever the stock market starts to tank. But remember, they’ve already made their millions. They’re simply looking for a safe place to keep them until the financial storm blows over.

For these reasons, bonds are probably not the best investment option for the everyday person.

Are Collectibles a Good Investment?

In a few cases, the answer is “absolutely.” More often than not, however, the answer is “no.”

For example, let’s say you bought the first issue of DC’s Action Comics way back in 1938 and held onto it since. Today, copies routinely sell for well over $1 million, a tidy return indeed when you consider that the original cover price was a mere $0.10.

Comic books are not the only collectibles that offer the promise of high returns. Baseball cards, rare books, wax records, and even dentist chairs often fetch incredibly high prices.

But, unfortunately, predicting which collectibles will become valuable is like playing the lottery. Millions of people discover unusual items at flea markets or yard sales and assume that they just struck it rich. In almost all cases, however, they find themselves sorely disappointed when they learn the item’s actual value.

Another problem with collectibles is their fragility. Consider for example the Superman comic we mentioned earlier, which was printed on cheap newsprint with inexpensive ink. Preserving it from harm for decades is almost impossible.

The same is true for most other collectible items. Coins and stamps, for example, quickly lose their perceived value as soon as they become slightly worn or damaged.

The bottom line on collectibles is that they’re a fun, nostalgic hobby which many people enjoy. But, as far as investments go, they’re one of the poorest choices you can make.

Are Precious Metals a Good Investment?

Of all the investments in this list, this is perhaps the only one which is more secure than US savings bonds. This is especially true when it comes to gold. Human beings have valued this rare yellow metal for as long as civilization itself has existed. It’s beautiful, universally recognized, and essential for many industrial and commercial uses. All of these factors make it a sound investment.

But that doesn’t necessarily make it a profitable investment. It’s true that gold prices may go up dramatically during economic downturns. On average, however, they remain fairly constant.

Similar drawbacks apply to metals like platinum and silver. At best, they’re a good insurance policy against potential losses in other investments. But choosing them as your primary form of security will probably doom you to paltry returns.

Are Vacation Rental Properties a Good Investment?

Once you consider all the features a good investment should have, we believe that vacation rental properties are the best option mentioned in this post. Here’s why:

It’s easy to get started – – especially if you choose a fractional investment plan that lets you get in for as little as $100. With this approach, you pool your money with other investors to purchase highly desirable properties. In return, you get a portion of the rental income throughout the property’s lifespan, which can easily exceed 100 years.

It’s low risk – – properties purchased in this way are covered by insurance, so you’re reimbursed the cost of your investment if they should burn down or suffer damage. Also, your protected from liability if a vacationer sustains an injury or other misfortune on the property.

It’s in constant demand – – Americans love to go on vacation, no matter how the economy is performing at the time. Yet they also want to get the greatest possible enjoyment from the location where they stay. This gives vacation rental properties, which are well-managed and charming, a distinct advantage over bland, generic hotel rooms.

We’d love to tell you more about the advantages of investing in vacation properties. Get in touch with us at today to speak with a real estate professional. You’ll soon have the facts you need to make an informed decision.