What the experts say

Investing for the disaffected

Fed up with the stock market? asked Ron Lieber in The New York Times. With headlines full of Wall Street scandals, plenty of investors “want nothing to do with the profit-making players of the American financial system.” Yet they still need to save and invest in order to retire in comfort. For an alternate route to financial security that bypasses the typical players, consider investing in municipal bonds, which help pay for local roads and schools. You can also invest in real estate; if you pay off the mortgage after you retire, “the rental income becomes sort of an annuity.” Or try investing in loans given to other people through services like Lending Club or Prosper, which are delivering returns around 7 percent. All of these routes are risky, but if you are convinced that the Wall Street “game is rigged,” sticking to your principles may be its own reward.

Finding profit overseas

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Investors hunting for healthy dividends should look to emerging markets, said Janice Revell in Fortune. Dividends there now average more than 3 percent, compared with just over 2 percent for the S&P 500. And yields look set to rise: As global growth slows, companies will have to “deliver larger payouts to keep attracting foreign capital.” In some countries, dividends are mandatory. Brazil, for instance, legally requires firms to pay out at least 25 percent of their profits. Slowing growth abroad is also lowering share prices, creating great buying opportunities. It won’t always be smooth sailing, but smart investors will be “paid a relatively generous income to ride out the voyage.”

Playing the housing rebound

“For investors, ‘home’ is no longer a four-letter word,” said Joe Light in SmartMoney.com. Home prices last quarter rose by their biggest percentage in seven years, and major market players like Warren Buffett are betting on the sector’s continued recovery. Investors who want to participate in the “rebirth of a sector they once left for dead” should focus on three main avenues: “investing in homebuilders, buying real estate investment trusts, and buying and managing individual properties.” The value of construction firms dropped so much in the bust that even without a boom in new-home sales, analysts expect the sector to grow. REITs, which own malls, apartment buildings, and office parks, “have been among the best performers this year.”