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You Don’t Have to Invest in the Stock Market

Posted By Jim On 09/21/2010 @ 12:02 pm In Investing | 36 Comments

The recent economic apocalypse (it’s been going on for long I’m running out of ways to say it without repeating myself!) has a lot of people re-evaluating how much they want to keep invested in the stock market. Between the dot com bubble in 2001 and the financial implosion these last few years, people just don’t trust the stock market anymore.

The reality is that you don’t need to invest in the stock market, especially if you have a short or no time horizon. There are a lot of other options outside of the equity market if you look for them. You can invest in a variety of bonds (though some say the bond market is overpriced because of a flight to safety) like Treasury and municipal tax-free bonds, hard assets like gold and silver (again, some would say they’re overpriced), real estate, and others.

I thought about this topic because a reader emailed me asking if real estate was a good idea. He’s seen his 401(k) tank the last few years while his real estate assets doing quite well (he had his own home and two condos he rents out) and was wondering if he should continue going in that direction. My “advice” (I don’t, and you shouldn’t, consider what I write as advice, think of it more like your friend telling you what he thinks) was that he should go with what he knows but be aware that he shouldn’t put too much of his wealth into one asset class.

Personally, I’m putting my savings in the bank and waiting for some good opportunities to put it to work. I still contribute to my retirement accounts whenever I can but I’m not putting any more non-retirement assets into the stock market because I’m losing faith in it. From time to time I get approached with business opportunities where I can invest directly, but I usually only consider the ones where I can leverage my expertise. It’s taking the “invest in what you know” mantra to the next level and I feel it gives me a better chance than some random stock. (this is, of course, by no means a sure thing and I don’t invest a lot, but this is where I’m going instead of the stock market now)

What do you think? Am I crazy? Do you agree with me? If you’re not investing in the stock, where are you investing now?


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