Unless you are a short term short, there are few places today where you can get a decent return on your money without risk. Cash yields under 1%. US Government bonds have sold off hard since last December, adding insult to injury for late stock market refugees. But there is one place where you can get 50% on your money virtually risk free.
Don’t laugh when I tell you where it is: it’s non-perishable staples. I did not say anything about stocks or investing, did I? But think about where you can keep your money safe for a while.
One obvious fallout from the recession are business bankruptcies and store closures. What happens when a store closes down? They have a 10% off sale, then, 20, 30, 50, 75, and finally 90% off before they start selling off the fixtures. Every household has items it always uses. If you don’t think regular prices on a particular item are going to drop, what happens when you stock up on that item when it’s 50% off? You get 100% return on your money – i.e. you spend $1 where you would usually spend $2. Whether it’s canned salmon, laundry detergent, or underwear does not matter.
Even if prices on an item you stock up on fall, they are not likely to fall 50% overnight. As long as you use up the item before then, you are OK. And the fact that you WILL use it makes keeping your money in it virtually risk free.
Another way to look at it: corporations make money in one of two ways – by increasing sales or cutting expenses. Either method adds to the bottom line. You can do the same. If it’s not a good time to grow your money, spending 50% less amounts to the same. You get to keep more of it, even if you only get 1% on what you keep.
Now, I have to admit: I did not come up with this strategy. My wife did. I realized that when she told me that dry paprika costs 50% less at Smart & Final than at Henry’s Marketplace (both regional chains in California). Granted you have to buy a lot, but if you use paprika regularly, why not stock up on it while you can?
What’s required for this strategy? Keeping your eyes and ears open for signs of possible store closings, and relentless comparison shopping. What are some of the safety measures (besides knowing that you will use the item)? Good door locks and up-to-date homeowner’s insurance. Well, maybe some extra storage space. The end result: 50% return on your money. Risk free. Right now. Guaranteed.
Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC – a provider of timely stock picks in small caps based on proprietary selection methods.
Article Source: http://EzineArticles.com/?expert=Slav_Fedorov
