The Three Legged Stool

My paternal grandparents were born near Lake Como, Italy. My grandfather learned how to farm, and he did just that until he died chopping wood at age 88. As a boy, I would walk into the barn where I watched him milking cows. Never got the hang of it, but I liked hearing the ping of fresh milk in the galvanized bucket. In order to get where he needed to reach, Popper would sit on a three legged stool. That wooden stool causes me to think of three investment legs for every household or business endeavor. As you know, lots of things come in sequence or synergy of three, even sneezes.

First leg: Investment Portfolio

Although debate continues about asset allocation, no one denies the impact and importance of diversification. Equally, all investors are aware of investment risk, even though many won't talk about it. Assets divided among a diverse group of assets adds further safety when money gets exposed to the unexpected. We may find ourselves within the matrix of major or macro economic changes. Observing the price of oil, the weakened value of the dollar, and the emergence of China recommends broad asset class participation. Robert Kreitler in his book, Getting Started In Global Investing writes, "Investors focused exclusively on on Wall Street are ignoring the global sea change occurring in world markets."

Noticed the manic behavior or volatility of the markets? Volatility equals investor uncertainty. Since institutions account for most of the stock and bond trading, even the "big boys and girls" find the markets "uncertain". Implementing hedge strategies seeks to reduce the uncertainty while benefiting from the volatility. "Hedging your bet" acknowledges that when one asset is up, another is down. Specialty mutual funds make commodity, currency, and real estate investment choices possible. Consider reading Roger Gibson's Asset Allocation: Balancing Financial Risk

Second leg: Real Estate

My maternal grandfather never trusted the stock market. Lumber, mortar, land, mortgages represented what mattered for him. Admittedly, it worked for him. My wife tells me of a local couple who have leveraged their home equity to purchase a "fixer-upper" that they hope to "flip" for a profit. Real estate is a net worth maker for some. All investments have "boom and bust" cycles. Landlords have lost tenants to low mortgage interest rates. Now, the cycle may change, and multi-unit rental property may provide positive cash flow and long-term capital gains. Although finding property where you live makes logistical sense; locating a property in places like New Bern, North Carolina may provide income and a retirement home. Scott Frank tells his strategy in Buy Low, Rent Smart, Sell High Third leg: Cash Flow

One of our children changed jobs recently. It was all about cash flow. In our community, those on fixed income become frustrated by increasing property taxes; it's all about cash flow. Finding a continued stream of income, even in small increments, validates the effort. From hobbies to web sites, entrepreneurial instincts work for many. Ask Martha Stewart or Kevin Bidwell. Each succeeds with an idea that serves users while providing potential life-time streams of income. Not many of us like multi-level marketing; however, multi-billion dollar businesses exist because many do believe in it. A call from a successful colleague living in India yesterday confirms this interest internationally. Ecommerce transactions exceeded 3 trillion dollars in North America during 2004, and all the ideas have not been discovered. Want some guidelines for testing your ideas? Read The Wall Street Journal, Monday, May 9, 2005, "You Have A Great Idea. Now What?" by Wendy Bounds.

"... A cord of three strands is not quickly broken." - Ecclesiastes 4:12 NIV (New International Version)

Ray Randall serves clients as a registered investment advisor with his firm, Ethos Advisory Services, Essex, Massachusetts http://www.ethosadvisory.com. He has wide experience within the financial services industry, writes a weekly newsletter for Ethos Advisory Services, and coordinates the developments at Echievements http://www.echievements.com. Ray holds a Masters Degree from Gordon-Conwell Theological Seminary, Hamilton, MA. You may email him or call (877-895-3756).

---

A Safe Port For Mutual Funds But Not You!

Soft dollars, a form of legal kickback, is a sly... Read More

Investing Psychology Today Requires All Traders to Awaken Their Speculator Minds

Stock trading strategies are as rampant today, as they were... Read More

What Is A Fair Market Value, Really? If Youre Going To Trade, Be Sure Its Worth It!

I've been involved in online trading, specifically with stock and... Read More

Introduction To FOREX

The Foreign Exchange Market, better known as FOREX, is a... Read More

Part II of Day Traders and Swing Traders and Options? Maybe!

Before every protective put trade it is possible to calculate... Read More

How To Create Wealth In The Stock Market

First and foremost, an opportunistic strategy for creating wealth in... Read More

Investing and Understanding What You Buy

"There is nothing more frightful than ignorance in action!" Johann... Read More

It Is Never Too Early To Start A Roth IRA!

The Roth is kind of weird until you get used... Read More

Can Your Annuity Do This?

Okay, so I can tell you I have sat in... Read More

Powerful Hidden Techniques Mystery Formula - The Covered Call Option Trading Buy-Write Strategy

For better or worse, most option trading investors purchase stocks... Read More

Penny Stock Investing

The Nature of Penny StocksFor anyone new to investing in... Read More

Numismatics are for Collectors, Not Investors

As a precious metals investor, you may heard much about... Read More

Retirement Plan Considerations Cheat Sheet for Small Business

RETIREMENT PLAN CONSIDERATIONS are something every small business person needs... Read More

Real Estate Clubs Hot Among Investors

Six or seven years ago, the stock market was booming,... Read More

Success Trading: Yet More Basic Terminology for New Traders

In this day and age of online brokers for virtually... Read More

Success Trading for New Traders: What Does Bid and Ask Mean?

Do you ever wonder exactly what's going on in the... Read More

The Perfect Economy?

The U.S. economic data reported this week showed strong output... Read More

Emotions: A Traders Worst Enemy; Get Rid of Fear and Greed - Youll be Glad You Did

You hear it over and over and over in books,... Read More

When Its Too Late to Save for Retirement

You are 55 years old (or somewhere around there) and... Read More

Bad News - Why The Financial News Media Can Cost You Money!

The communication innovations we have around us today like the... Read More

Dumb Money

Many people have, at one time or another, taken some... Read More

Volatile Oil

The Light Crude Continuous Contract fell from $67.70 a barrel... Read More

Retirement or Financial Freedom?

In the past most people never retired. They died. The... Read More

25 Ways to Find Companies to Buy

When you start your program to purchase your "ideal" company,... Read More

Investing In or Owning Drug Lab Properties

Clean Up (includes the insides and the outside of a... Read More

It?s Never too Early to Start Investing!

Remember the old saying, "never too late to start"? Well,... Read More

Dont Catch a Falling Knife

One of the most common mistakes made by inexperienced investors... Read More

Investor Guide to Financial Health

Step 1: Spend less than you earnPerhaps the simplest financial... Read More

Investigate Before You Invest

"Through wisdom is a house built. And by understanding it... Read More

Investing & Online Stock & Share Trading: Money & Risk Management - Atkinson Portfolio Planner (1)

This article was originally featured in Daryl Guppy's 'Tutorials in... Read More

Volatile Range

The stock market fell sharply Thu and Fri before and... Read More

Getting Started Investing is Often the Hardest Part

There are several reasons people give for not investing their... Read More

Franchise Opportunity Sellers Beware; franchise buyers lie on forms?

It seems completely absurd that franchise buyers lie about their... Read More