Stick with Stocks in 2010?

I believe everyone is seeing their bank savings rates keep going lower and lower to practically zero. So what do you invest in? Forbes posted an article 12/07/09 directly addressing this.
http://www.forbes.com/2009/12/07/asset-allocation-investing-market-equities-portfolio.html?partner=yahootix

Even if the Fed raises rates back to 2%, the rates on savings accounts, CDs, and Money Markets will remain low. This should help stocks to continue to attract money but at the same time you have to be selective in what sectors of the market will continue to grow. Think about how the consumer is spending or if overseas economies are recovering faster. Personally, my belief is that the chinese market is too controlled by their government and too volatile for my money. A preferred way to invest in Rest Of World, find stocks of companies exporting to these places. Ofcourse, inflation is always a concern which the article addresses with some suggested investments in commodities type funds. I like I-bonds for this also.

For nervous people that need safety, stick with shorter maturity bonds or I-bonds. Any rate change will affect the longer bonds more than shorter maturity bonds. Rates always affect the price of a bond inversely. What the article does not tell you is how short on the maturity side is safe to invest in Bonds. I have heard to stay at least with maturities of one to two years or less because of the unusual low rates currently. Better yet, call the mutual fund companies which have a Short-term Bond fund and ask them how much the maximum up and down percentage change has been over the last 5 years. Example, if it is +/- 3% for that fund, and the yield is currently at 2.5%, you could possibly lose 0.5% or more with a rate change.

Good site for Investor Information

This site offeres some really good talking points everyday. They do manage money, but there is a lot of free information. One of their radio broadcasts discussed mutual funds and other investments considered to be safe enough for people to sleep at night.

The main web page is: http://www.investtalk.com/

The article was published from Kiplinger's is posted at this link.
http://www.investtalk.com/goout.asp?u=http://www.kiplinger.com/magazine/archives/investments-that-let-you-sleep-tight.html

It is a very good read for any type investor.

Good Asset / Bad Asset

Kindof an addition to my previous post.

Even though I am not a full supporter of "Rich Dad, Poor Dad". A very important lesson from his books is that you can have a real asset, or good asset. A house is actually a bad asset. I know that makes everyone go into shock. How could this be you exclaim? Well very simply, the rule for being an asset is when it produces cash in your pocket. Anything that gives you cash flow, or makes you some money, is truly an asset.
Now, a bad asset, or simply something not considered an asset at all, will not make or produce any money for you. An example; if you pay to have your car, or it keeps depreciating in value, it is a liability. Anything that draws money from your bank account is a liability. According to "Rich Dad", we need to build up more assets than liabilities in order to be financially free. The assets will keep paying you even into retirement.

Good Debt / Bad Debt

Just a simple explaination to help people understand that some debt may not be evil. A lot of people think that all debt is bad. This is not true always. Mortgage debt can actually be very beneficial. Ofcourse it is never good to owe more than you can pay, as we have learned in the 2008 housing/banking meltdown. Mortgage debt is used as a tax write-off, there by reducing your over-all tax burden. Compare this to credit card debt, the worst of all debt, and you can see my point. Also, do you get any tax break for that car loan that you have? No. Most debt does cause you to lose control of your finances and make you scared to death. But, there is one silver lining for mortgage debt.

Inflation Protection without the RISK

I was contemplating for a while how to save for a kid's education. Then after researching a bit, I-bonds came up as a smart choice. These bonds actually look like a perfect safe investment for education and retirees. Ofcourse, retirees can also look into TIPS. More info can be found on the Treasury Direct page.
http://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm