As we will see, it is safe to put money into bonds and the savings bank. But if you are willing to take risks, Forex can make you a lot of money.
The article is mostly for small investors who want to make a lot of money, like someone with between, say, $5,000 and $100,000. If the $5,000 investor gets a return of not 3 percent, or $150 per year, but 12 percent, or $600 per year, his gain will not be small.
If the $100,000 investor gets $12,000 instead of $3,000, the difference is big enough to mean that he or she is no longer financially dependent on anyone else.
Theoretically, a large investor with $1,000,000 or more doesn't need to think about these kinds of investments because putting $1,000,000 in a savings account gives him $30,000 a year or putting $1,000,000 in tax-free bonds at 4% gives him $40,000 a year without having to pay income tax. However, strangely enough, this is the type of investor who invests the most in the kinds of opportunities this book looks at. Some of the biggest pools of money in the world do almost nothing else but buy mortgages at a discount, loans from other countries, real estate syndications, and investments in partnerships.
Strange as it may seem, a very wealthy person is often the one who is least happy with a low yield. If these kinds of people invest in the opportunities talked about in this book, the smaller investor should at least give these opportunities a quick look. The saying that the rich get richer and the poor get poorer may have a good reason behind it. With more information at their disposal, the rich might know how to invest more wisely.
In a stable economy, we might want to make high-rate investments, but we don't have to. But our economy is not stable. In our economy, the value of our savings decreases every year. Dollars don't mean much on their own. They only have value if they can be used to buy goods and services. Let's see how the dollar's buying power has changed since the war ended.
Consumer prices went up by 102.8 percent in 1950, compared to 1947-1949, which was 100 percent. If we look at the fact that we have $102 in a savings account that pays 3% interest in 1950, we can get a very clear picture of how savings work during times of high inflation.
By 1960, prices had gone up by 126.5 percent in 10 years.
Now, if the $102 in the bank in 1950 earned 3% interest, and a hypothetical tax of 33% was taken out, the owner would find that his savings account had grown to $122 by 1960. Even with his interest, he wasn't able to keep up with inflation. In fact, he had less money in 1960 than he did in 1950.
If a person was in the 50 percent tax bracket, 4% added every year would be the same as 50 percent. In 1960, he would have the same amount of money as the person in the 33 percent bracket, which is $122.
Even though Forex is much riskier, you can make a lot more money from it.
Don't put more on the line than you can afford to lose.
