You Don’t Need to Be Rich to Invest Successfully

Everyone can invest. And everyone should.

It doesn’t matter if you’re old, young, rich, or not.

This is a long-held belief of mine, and one I’ve written about for years.

You don’t need a $100,000 portfolio to start investing. Our Health & Wealth Bulletin managing editor Laura made her first investment 15 years ago with just $25.

The real key is to get your money working for you… even if it’s not much.

My friend and Extreme Value editor Dan Ferris knows this well himself…

In the early days of his investing career, Dan made a critical mistake that left him broke… with just $268 to his name.

But, as Dan tells it, he was able to turn this financial disaster into a good thing. It helped him narrow his focus and develop a five-point system for only picking the best stocks.

Today, he lives in a mansion in Oregon and has everything he’d ever want… luxury cars, a music room full of guitars, and more.

It’s all thanks to a secret that Dan discovered 24 years ago. It’s a very strategic, risk-averse approach that looks for equal parts value, safety, and big upside potential.

Right now, folks are chasing gains on crazy stuff like Dogecoin, AMC Entertainment, and GameStop. This sort of overexuberance for bad investments is going to end up with a lot of people losing a lot of money.

According to Dan…

It’s critical that you have a proven system in place to find REAL investment opportunities…

Like the fantastic value stock I recently recommended that my research indicates could return 200% or more over the next couple of years.

This is an opportunity rooted in REAL research, and REAL research with REAL upside.

If you want to learn some of the best – and safest – ways to grow your wealth during this crazy market environment, click here.

Now, it’s time to dig into this week’s Q&A… As always, please keep sending your questions, suggestions, and stories to us at [email protected].

Q: Isn’t it better to keep my money working instead of letting it sit in cash earning next to nothing? – V.S.

A: You’re exactly right… up to a point. Still, every investor needs to be holding some cash right now.

Today’s boom will inevitably end, likely in a painful crash. When that happens, you’ll want cash. It obviously protects your capital, but even more important, it allows you to buy stocks and safely sell options when no one else is able to.

If you’re fully invested today in the S&P 500 Index and it crashes 40%, you’re going to look around and see tons of wonderful businesses trading at great prices. But you’ll be stuck. If you want to buy those discounted stocks, you’ll need to sell your own holdings… at the same undervalued price where you just had to sell.

Holding cash gives you the opportunity to buy at great prices when the crash comes. You can sell puts and rake in thousands of dollars in premium because of the fear in the market. And you’ll have the cash available if you’re assigned shares.

Legendary investor Warren Buffett views cash as optionality. As Alice Schroeder writes in The Snowball: Warren Buffett and the Business of Life

He thinks of cash differently than conventional investors. This is one of the most important things I learned from him: the optionality of cash. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.

So while cash is going to earn you close to nothing while stocks are booming, you’ll appreciate its value once the market inevitably falls.

To be clear, this does not mean you should exit all of your option positions and go to all cash – far from it. You need a diversified portfolio, which should include stocks, options, precious metals, government bonds, and cash. In my Retirement Millionaire and Income Intelligence advisories, my team and I regularly cover how much of an allocation to cash folks should have depending on their risk tolerance.

Q: I understand that not all cinnamon is created equal. I believe Ceylon cinnamon to be the healthy kind, while all other cinnamon might be damaging to your liver and kidneys when consumed daily. Unfortunately, most cinnamon in the U.S. seems to be the bad kind. – H.D.

A: You’re right in that there are different types of cinnamon… Ceylon (Sri Lankan) cinnamon and cassia cinnamon.

Each type is distinct. They are harvested differently, they taste a bit different, they smell different, and they have different chemical compounds. Ceylon has a slightly sweeter, milder flavor than the cinnamon Americans are used to, and it’s tough to find.

Cassia is most commonly found in the United States, and it has three types: Indonesian, Chinese, and Saigon (Vietnamese). At your grocery store, you’re probably buying an Indonesian variety.

Studies have found both to be healthy, although no studies have specifically compared the health benefits and risks between the two.

Both types, however, contain a flavor compound called coumarin that can be harmful in high doses… causing liver damage or other health complications. Cassia cinnamon does contain more coumarin.

But consuming enough cinnamon to poison yourself is pretty rare… Eating 0.05 milligrams per pound of body weight is a safe bet. So, an adult weighing 178 pounds could safely ingest 9 mg of cinnamon in a day (about a sprinkle of cinnamon).

As we’ve said before, cinnamon is shown to be very beneficial. It can help people with type 2 diabetes control their blood sugar levels.

Cinnamon is also anti-inflammatory and anti-bacterial… As such, it can help with things like long-term weight loss (along with a good diet and exercise), Alzheimer’s disease, HIV, multiple sclerosis, and chronic wounds.

As long as you’re not consuming huge amounts (or using cinnamon supplements), it doesn’t really matter which cinnamon you’re using. A sprinkle of cinnamon on your food a day is fine. So I’ll keep getting my cinnamon on the regular. I like to sprinkle a little in my cup of coffee. I find it gives my drink a nice little punch of flavor.

What We’re Reading

Here’s to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
August 13, 2021