Quote: (06-07-2016 07:57 PM)Kissinger2014 Wrote:
Quote: (06-07-2016 01:07 PM)PhDre Wrote:
Thanks for all the good advice.
In the end I believe that only real estate holds real value (and maybe precious metals, but they don't generate income streams).
The reason for my 3-5 year horizon is that in that time frame, I will probably be able to buy a house at a massive discount (just a perfectly legal rearrangement of family wealth, no shady business).
In the meantime I will look into funds/ETFs that invest in dividend paying stock.
Do you suggest that I mainly aim for funds with exposure to European companies (I am spending all my money in euros) or should I diversify and include funds with exposure to US/China/...?
Also, currently I hold a fund that invests in bonds and other debt securities, all in euro.
I've had it for the past 8 years, and it has slightly outperformed the Euro MTS 1-3 index, which is used as a reference indicator for the fund.
Do I sell it, or do I keep it?
I strongly suggest you reconsider the idea that only real estate and precious metals hold "real value." Over the past around 100 years, equities (stocks) have outperformed real estate and precious metals. Companies like Johnson and Johnson or Exxon Mobil, even Facebook and Apple, have "real value." Trademarks, distribution systems, network effects, all have some sort of "real value." Holding any sort of capital that is able to add value and create a product or service that people are willing to pay is the basis of the capitalistic system and are of great value --- the greater value a company can add, the more it is worth.
I absolutely agree that these companies hold "real value".
However, as a minority shareholder you do not have the power to put any claim whatsoever on this value.
If you get lucky, the company decides to pay a decent dividend and/or the market value of the companies rises.
I held 2k in shares of a certain bank prior to the banking crisis.
This share was listed by all market analysts as a super safe investment that slowly but steadily appreciated in value.
Then the crisis hit and the bank was bailed out by the government (with my tax money).
All of a sudden my shares were worth only 1/1000 of their original value.
I didn't attach too much importance too it, I accepted that I had played and lost, and simply kept the shares too see if they would ever rebound to a decent value.
Then the bank reorganised itself and they started to buy back stock.
With one caveat: only those who had 1000+ shares (which represented 20k+ just prior to the crisis) would get any compensation. I held 100 shares and mine simply got confiscated, just like those of countless others. And there is no legal action that we can take.
So the bank is still there, it still has employees and infrastructure, it still does business and it still pays millions of euros a year to its executives. Yet my claim to any of that "real value the business provides" got taken away from me, with the approval of the government.
That is why I think that personal possessions like real estate represent more "real value" than stock. Because you have far more control over them and have a far stronger claim on the actual value that they represent.