Jaspreet Singh is the financial personality behind the “Minority Mindset” YouTube channel, which has over 1.7 million subscribers. In a recent video, the popular commentator offers his perspective on where you should invest your money.
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The 11-minute video is a snapshot of Singh’s overall investment philosophy on how to navigate your finances when “everything is overvalued,” as many of his viewers currently feel. Here are the answers Singh offers, along with an overview of the reasoning behind them.
Put Cash in a High-Interest Savings Account
For Singh, having idle cash lying around is simply a waste. Although perhaps not an “investment,” Singh says that viewers should shovel all of their free cash into a high-yield savings account.
He explains that a high-yield savings account is the same as any “regular” bank account, it’s just offered by an online bank. But the accounts carry the same FDIC insurance and your money is not tied up like it is in a CD, where you’ll have to pay penalties if you take out your money before it matures. In the current market environment, Singh says you can find high-yield savings accounts that are paying around 5% interest. While you’re waiting for another opportunity, this is a good place to still earn a return on your money.
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Buy Treasuries
Another good alternative for your idle cash, according to Singh, is to buy U.S. Treasuries. As Singh explains it, U.S. Treasuries are the standard by which the risk of other investments are measured, as they offer what’s considered a “risk-free return.”
Essentially, when you buy a U.S. Treasury, you’re loaning the government money for a specified period of time. As the only way you won’t get paid back is if the U.S. government defaults, it’s a very safe place to keep your money. This is an especially attractive option, Singh says, if you’ve maxed out the FDIC insurance on your high-yield savings account, as all Treasuries carry the same U.S. government guarantee regardless of the amount you invest. Meanwhile, you’ll be earning a return in the neighborhood of 5% at today’s market levels.
Avoid Buying Overvalued Investments
When markets are overvalued, Singh stresses that you must avoid chasing high prices. As he puts it, “If you think it’s overvalued, don’t buy it.”
Don’t chase overvalued investments and don’t invest emotionally. If a stock is skyrocketing and it seems like everyone else is making money off it, that’s a terrible time to buy it, according to Singh. The same is true with real estate. If it’s too expensive, wait it out.
Be Patient
So what are you supposed to do if you can’t chase overvalued investments? Singh simply says that you should be patient. No market stays in one spot forever, and if things are overvalued now, there will usually come a time when they become undervalued.
Using the real estate market as an example, Singh says that today we’re in a seller’s market, but it’s the complete opposite of the buyer’s market that existed just a few years ago. Singh doesn’t understand why someone would take out an 8% mortgage to buy an asset that will likely only appreciate by 7% annually.
If You Don’t Want To Wait, Work Harder
Can’t wait for the markets to turn? Then look harder for a deal. In the real estate world, for example, Singh says there will always be distressed properties that are undervalued because they need work or are just not appealing to buyers. If you have the time, ability and patience, you can buy properties like this in good locations, put in the effort and provide value to it so that you can still generate a return. It will just be harder to find properties like this now because inventory is so low.
Another suggestion Singh has is to simply continue to invest passively. While he stresses that this may not work for everyone, what he does is sweep the cash out of his account every Wednesday and put it into his portfolio of exchange-traded funds, most of which generate cash flow. This way, he’s continually building his cash flow regardless of whether the market is overvalued or undervalued. Since no one can predict the day-to-day movements of the market, especially in an emotional area like the stock market, he feels it’s best to just continually invest.
Bottom Line
The main lessons from Singh’s video are that you should always generate a return on your money — but that you should never chase overpriced assets. While he emphasizes that he’s “just a guy on YouTube,” is not a financial advisor and that he doesn’t recommend his choices for everyone, it’s important to be patient with your money and wait for a good opportunity.
Singh recommends that investors educate themselves and find investments that match their goals, their risk tolerance and their investing interest. After all, what works for him might not work for everyone.
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This article originally appeared on GOBankingRates.com: Jaspreet Singh: 5 Best Investing Tips for Your Money
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