Thursday, June 29, 2006

What's next?

What should I invest in next?

I have just completed the purchase of a residential investment property. I have a modest amount of cash left over and will be back on the savings path again at the end of the month when I get paid on Friday. So I have cash on hand and more cash will become available for investment each month (excepting November and December when I need to put money aside for taxes and our Christmas holiday).

The question is what should I be doing with the money?

The longer term plan is to allocate about half my assets to real estate and half to equities. If it ends up being an unequal split that is not a problem. At present I am over weight real estate and underweight equities.

Preliminary thinking throws up the following choices: for the deposit on another property. I will need two more small residential properties to achieve the desired real estate component from my retirement portfolio (paying off the mortgages is another matter);

2.increase payments into equity funds. The recent pull back in a number of markets has made these more attractive than they were a few months ago; for an alternative investments. There are a few options available for retail investors like myself - a limited number of hedge funds, bullion - any others?

4. reduce debt. While the gearing in the real estate portfolio is relatively modest, paying off one of the mortgages with the resulting improvement in cash flow is always tempting;

5. build up some cash. I am not a fan of holding cash for the longer term because of the corrosive effect of inflation but it is a useful parking place for money pending identification of a more constructive use.

No decision as yet. In the short term option 5 (cash build up) is the default option. Beyond the short term this is not a sound choice. I'm starting to feel indecisive which is, itself, not a good sign.

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