|Home||About Us||Resources||Archive||Free Reports||Market Window|
Monday, August 2, 2010
The government has declared war on savers...
It wants to stimulate the economy, boost business activity, and lower unemployment. When you save money, you don't support this agenda. Your money stays in the bank earning interest.
To persuade you not to save, the Federal Reserve has set interest rates at zero percent. You get no reward for saving money. In addition, the Fed is inflating the money supply, which causes asset prices to rise... and erodes your purchasing power.
It's also engineered a big bounce in the stock market. Thanks to this 65% rally, all the best stock-market income investments – like pipeline stocks and real-estate investment trusts – are now overvalued, dangerous, and offering record-low income yields.
Most people have no idea how troubled the economy and the stock market are right now... and they don't understand how critical savings and income will be in the coming years. They're carrying on with their everyday lives like nothing's wrong. Instead of saving money and preserving what wealth they have left, they're returning to debt and consumption.
They've fallen victim to the government's war, in other words.
I'm going to fight the government's agenda... and I'm going to save my money regardless of zero-percent interest rates and an overvalued stock market. To pull this off, I've had to come up with several extraordinary income ideas that pay high yields and keep my money safe...
I call this strategy "Black Market Income"...
"Black Market Income" sounds illegal, but it's not. I've simply turned my back on the conventional savings vehicles offered by brokers and bankers. Instead, I've trawled the stock market for undiscovered pockets of safe income. And I've looked outside the stock market... and outside the financial system altogether.
Right now, my favorite Black Market Income ideas are...
Preferred stocks and bonds are the safest investments trading on the stock market. That's because they are loans, not ownership rights. I lend my money, and the company has a legal responsibility to pay back my loan in full with interest. I don't care about growth, profits, revenues, or costs. All that matters is the company can pay me back my debt with interest at the agreed time. You can expect 7% dividend yields from safe preferred stocks.
Buying stock in the world's strongest companies as they raise their dividends every year is the most reliable way I know of to build wealth . Buying stock directly from the company and avoiding brokers (and their fees) is the best way to set this strategy up. These programs are called Direct Investment Plans, or DRIPs for short.
Local governments are desperate for money. To speed up the collection of property taxes, they issue tax certificates to investors. These certificates pay anywhere from 14% to 24% in interest. Tax certificates are backed by property, so they're extremely safe, and your local government handles all the administration of the loans. You simply supply the capital and collect interest.
My 12% Letter subscribers can read my special report on tax-certificate investing in the Black Market Income section of the 12% Letter's website.
Mortgage REITs (which we call "virtual banks") buy high-yield mortgage securities with borrowed money. They earn the spread between the interest rates they pay on borrowings and the interests rates they earn on their investments. With the Fed keeping rates at zero, mortgage REITs print money... and will continue printing money as long as interest rates remain at zero. Given the weak economy, I expect the Fed to keep interest rates low for years to come.
With the government waging war on savers, most Americans will be condemned to a life without savings and income. But with these unusual income investments, you'll be able to keep your savings safe and grow them with interest.
A couple weeks back, Tom told DailyWealth readers about another safe, high-income option for savings that are earning next to nothing in the bank: the Monthly Dividend Trust. As Tom explained, the Trust "performs better than any bank account, CD, or Treasury bond... yet its consistent results make it one of the safest places out there." Learn more here: This Almost-Safe-as-a-Bank-Account Investment Pays 5.5%.
NEW HIGHS OF NOTE LAST WEEK
iShares Singapore (EWS)... freedom works
Thai Fund (TTF)... Thai stocks
Korean Fund (KF)... Korean stocks
Indonesia Fund (IF)... Indonesian stocks
Arena Pharmaceuticals (ARNA)... obesity drugs
Cosan (CZZ)... world's largest sugar and ethanol refiner
StoneMor Partners (STON)... cemetery operator
Coffee ETN (JO)... coffee
Altria (MO)... cigarettes
Crocs (CROX)... footwearCarbo Ceramics (CRR)... natural gas fracking ammo
NEW LOWS OF NOTE LAST WEEK
LSI Logic (LSI)... semiconductors
Teva Pharmaceuticals (TEVA)... generic drug leader
Chico's FAS (CHS)... women's clothing retailer
Western Digital (WDC)... obsolete hard drives
Seagate Technologies (STX)... obsolete hard drivesInternational Game Technology (IGT)... gambling equipment
In The Daily Crux