Hi Malcolm,
How many times have you seen an evident bargain but you didn't at that particular moment have enough liquidity(alias cash) to avail yourself of that bargain? If you're like me, plenty of times.
Actually, liquidity has never been a problem for me. Some years ago now, I attended one of those seminars where the presenters advised the attendees on how to get their personal finances in order. Among the recommendations was to insure what you can't afford to lose (for example, health insurance, home insurance, life insurance, liability insurance, auto insurance, umbrella insurance, disability insurance and so on). Another key piece of advice was to keep a minimum of 3 to 6 months of take-home earnings in cash in an interest bearing account, such as a money market or a savings account, for emergencies. I went a bit further and kept a full year's pre-tax earnings in such an account. We don't buy cars on debt anymore, instead saving the necessary monies to buy the vehicle in cash rather than suffering the financial loss of having to pay interest. Yes, the cars periodically get old on us, but we lose less in depreciation and save on interest and insurance, so we can suffer with an older vehicle for a few years while garnering the savings. Oh, and the #1 piece of advice was to live beneath your means, shunning personal loans and credit card debt, in favor of saving what might have been spent elsewhere...
When opportunity does come along, I seem to have two other problems. Either I don't recognize the opportunity for what it is and fail to act upon it, or as is more often the case, I tend to study it and research it to death, being quite hesitant to "pull the trigger" so to speak, and over time it becomes opportunity lost. Oh, well... Better safe than sorry I suppose... <g>
Be careful of the REITs, depending upon the variety of REIT. Here in the USA, commercial rental property is currently sporting something like a 16% average vacancy rate, with the higher rates being in the bigger cities and the lower vacancy rates in the suburbs. It's a renter's world right now, and high end rentals are going dirt cheap rather than stay vacant (the property owners' need to pay the taxes, so some rent is better than none at all).
There's an article in the USA Today, today's edition, on the problem.
Good luck, don't let it burn a hole in your proverbial pocket.
That's also not a problem, as I tend to be overly cautious way too often. I've got to learn to accept more risk sometimes.
KJC |
