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It’s been a good week for real estate. Signs that the housing market is stabilizing are helping propel recoveries for home builders and for real estate funds on the financial markets. Indeed, investors are becoming interested in real estate related investments again in the hopes that they can get in now and catch a ride on the recovery.

Home builders are seeing an increase, thanks to recent data that housing starts continue to rise, and that the home builders confidence index has gained some ground. The Street reports on the success that home builders are seeing:

Rehaut says supply appears to be more manageable, while demand has begun to stabilize and even slowly re-emerge. “In such an environment, we believe the builders will once again demonstrate positive order growth — historically a powerful positive catalyst — and home-price declines will near their end, resulting in the abatement of impairment charges,” he wrote in a note.

While home prices are likely to continue to decrease — at least for a little while — they should be at the bottom quite soon in most markets, and are even rising in some markets.

Additionally, real estate funds are on the rise. The good news from the housing market means that REITs and other real estate funds are doing well. From ETFs to mutual funds that are heavy in real estate investments, investors are starting to take a look. These types of funds are also popular amongst folks without the capital to buy real estate. It allows them a piece of the action.

In the end, it looks as though real estate investing is likely to become popular again. Investors are banking on a recovery, even though peak housing prices are years away. If they can hold on to home builders and real estate funds for the next five to 10 years, they expect to make some solid profits.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

Recent events have me thinking about what makes a prudent investment. After all, when one looks at some of the ways that late pop singer Michael Jackson invested his money, it is difficult to think that he always made wise decisions. Or maybe his investments were reasonable, but the way he overspent (his legal problems only added to his costs) rendered his investments decisions moot. While Neverland (and the toys continually bought) turned out to be poor decisions, buying the Beatles catalog was probably a smart move, reports BusinessWeek:

Shortly after his string of early 1980s hits that included Thriller, one of the best-selling albums of all time, Jackson was shrewdly advised to buy the Beatles catalog for $47 million. Ten years later, Jackson merged his music company with Sony Corp.’s (SNE) music publishing arm in a deal reportedly worth $90 million to him.

Today, that company owns the publishing rights to thousands of hit songs by everyone from Neil Diamond to Lady Gaga. Music publishers collect royalties from radio stations, movie studios, and record labels every time a song is played or album sold. Jackson’s half interest has been estimated to be worth as much as $500 million.

At any rate, I began wondering to myself about what makes a prudent investment, and how you could figure out if you were making a wise decision. After all, all investment carries the risk of loss, and anything that seems a good idea at the time might turn out to be a poor idea. But here are some tips that might help you better determine what might make a prudent investment:

1. Potential for gains. You want something that is likely to increase in value over time. And those gains should overcome any expenses that you incur. (This is why I rarely think a primary residence qualifies as an investment; what you pay in interest almost always overcomes the amount of money you make when you sell a home that has appreciated in value.)
2. Acceptable risk. You need to be able to determine your risk tolerance, and make investments that have risk that is acceptable to you financially and emotionally.
3. Fundamental appeal. A prudent investment is one with fundamental strength, and an underlying appeal that will still be intact years from now. You have to be able to sell it at some point in order to make money on it.

At any rate, imprudent or not, Michael Jackson truly was a great entertainer and worldwide icon worth remembering.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.

One of the fears I hear regularly is that with stock market volatility — and other upheavals in the investing world — that investing is “too risky” or “not smart” right now.

It is true that some types of investing may not be the best idea right now, especially for beginners. But investing is still a smart choice. It is important to use investments to allow the law of compounding interest to work in your favor. You just have to be careful about what you invest in.

Stocks

If you choose carefully, picking fundamentally sound value stocks, you can actually find some great bargains right now. Buying more while the market is mostly down on most days can mean great gains down the road. Index funds are another way to get into stock investing without exposing yourself to excessive risk (although that risk will always be there). Mutual funds can also offer stock investing diversity with lower risk than individual equities (but watch out for the associated fees).

Bonds

These are considered “safe” investments — when they are government bonds. Federal bonds regularly grow, albeit at a rather stodgy rate. However, they can make good investments in terms of safety, and they generally do better as the economy falters. For better returns (but greater risk) corporate bonds and municipal bonds can be invested in.

Currencies, Commodities and Futures

Currencies are rather risky. When you get involved with FX trading, you should have a high risk tolerance. It is possible to make quite a lot of money on the currency market, but it requires some practice and the ability to take chances with your cash.

Commodities and futures are also quite risky. These require knowledge of markets and savvy decision making. Any number of factors can affect how commodities and futures move, and it is important to know what you are doing and to have a high risk tolerance when you engage in commodities and futures trading.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

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futures trading, investments, FX trading