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The stock market stresses me out, but I’d like a higher return than the 2 percent I’m currently earning in bank certificates of deposit (CDs). What about investing in real estate?

Truth is, there’s no investment that doesn’t involve some risk. That’s the bottom line. Your concerns about the stock market’s recent deep losses and unsettling gyrations are well-founded, but don’t rule out the market completely, especially if you’re young. Over a period of 20 years, the stock market generally gives an investor a return in the 9-to-11-percent range. That’s why to build wealth aggressively for the long term, you should put at least some of your funds in the stock market. The key is diversification–spreading funds across several different types of investments. This helps keep your financial boat afloat in rough waters.

Real estate may appeal to you as an investment because you can buy, rent and manage the property yourself, and that’s ultimate control. You can also decide that you’ll be a real-estate investor, not a landlord, and hire a property manager so you don’t get calls at midnight when the furnace goes out. Financial specialist Mike Tiret of Tiret & Company, CPA’s in California, says, “Real estate is a great way to go, but you must invest money you won’t need to use for at least ten years.” He also warns that “even the real-estate market has periods when it goes down.” The California realty market, for example, declined for nearly eight years during the mid-1980’s and early 1990’s.

If you like the idea of real estate as an investment but can’t afford to buy and hold another piece of property in addition to your own home, check out nonpublicly traded real-estate-investment trusts, or REITs. The companies that run these trusts use investors’ money to buy lots of property and typically pay dividends of 7 percent to 8 percent. The upside: You see far less volatility, because these REITs are not publicly traded–that is, not tied to the stock market. The downside: Your money’s tied up for ten years, and if the real-estate market should collapse, so does your investment.

I’ve managed to hold on to my job during a series of layoffs at my company. I don’t know what could happen next, but I want to be prepared. Fortunately I have no debt; I don’t even have any credit cards. But my savings are pretty modest. How much of a cushion do I need to tough out a potential job loss?

Good for you that you have no debt. But you do need credit as well as cash for a cushion against harder times. Many people don’t understand that you don’t actually have a good credit rating until you use credit and pay what you owed on time. So not only should you put away enough savings to cover four to six months of fixed living expenses–rent or mortgage, food, utilities and transportation–but you also would be wise to apply for a credit card. Get one that charges no annual fee and the lowest possible annual percentage rate; you can shop for the best deals on Use it responsibly to establish a good credit record. And be sure to forego the credit-card insurance many banks peddle these days. Although the insurance costs pennies per $100 of your credit balance, in the event of unemployment or disability, it only pays your minimum balance. The insurance doesn’t pay off your entire debt, so this coverage can be costly over time.

Valerie Coleman Morris is an anchorwoman with CNNfn.

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