Investing And Your Future

Archive for May, 2009

If you want some bad news about the state of financial America you won’t have to look very far.  The economy is the star of the show at the moment, and everything else acts as the supporting characters.  Everything that everybody is doing revolves around saving money, getting more for their money and not having enough money .  Any real or imagined problem or situation is suddenly now completely understandable because we are having hard times or so everybody is told.

The cluster of people who have the all important job of estimating everything from how long it will take to get back to normal, to giving suggestions on how to reinvent life as we knew it, around being down and out and just plain broke, are having a field day.  These geniuses in estimations, projections, and forecasts are telling us everything we already know and don’t really want to know, and leaving out some of the juicy info that we really can use.

Reinventing our lives to allow for poverty and hardship seems a little counterproductive, but some believe skimping and doing without will bring about abundance.  With abundance being such a subjective state of being, a lot can be said for living in the moment.  If people can really cut out their daily frappuccinos and still feel good, chances are, the frappuccinos were not what was making them feel good anyway.  And if they cannot cut out their favorite caffeinated treat , but instead find some other way to keep more of their assets liquid, then they should never have even considered the idea in the first place.   The fact is, no matter how things are going in the world, life is happening now, and it is not going to wait for the economy to get better or for the newscasters to get bored with talking about it being bad.

Even with life waiting for nobody it can still feel pretty good to have those liquid assets hanging around.  So what stays and what goes?  This is as individual as each person, but here are some pretty safe bets to a more fluid financial status:

Keep at least some of the treats: Just make sure that they are your favorite treats.  You wouldn’t invest your money into something you did not expect to get maximum return on, or at least you shouldn’t.   Same thing goes for your treats, whatever they are, keep the ones that you love and leave the ones that you feel take it or leave it about.

Look your best and stay healthy:  Do not expect to be motivated to stay financially sound if you don’t look and feel the same.  You are your number one asset and you are in charge of keeping your best asset at its peak of excellence.  Investing in yourself is investing in your future.

Save with a plan:  If seeing your bank account accumulating money makes you feel happy, pick an amount and start putting it aside from every source of income that you receive, every time you receive it, this makes it fun.  And always have a use or goal for the money once it gets to a certain amount this way you can live in the present with money from the future.

After the horrendous stock market plummet of 2008, many wonder ‘why invest at all?’ Some can see putting cash aside to save for a rainy day, for example a layoff, but many question the reason for savings beyond that.

For starters, it should be emphasized a lot that ’saving for a rainy day’ is incredibly important. No one knows if the labor market will go back to normal again. We’re already at 9% unemployment and that doesn’t even take into account underemployment (people who want to work full time but can only find part-time work). Also, with the socialist path America is now going, we are likely to have sustained higher unemployment figures- 4-5% unemployment may just be a thing of the past. Look at France’s figures. That’s the type of economy we are attempting to mirror.

So I hope I scared you a little bit on the necessity of saving for savings sake. Not just relying on your credit cards, since you have to pay that back eventaully + interest and you never know if the credit card company will suspend your line of credit (they are doing that for people with impeccable records as we speak). Save for savings sake.

There are two other reasons to save: delayed gratification and to make money. What do I mean by delayed gratification? Quite frankly, if you have leftover money that you don’t really want to spend, you may want to spend it later. Of course, you may have inflation to contend with (not right now, but it is possible), so you will do your best to keep the purchasing power of that money for later. Delayed gratification is similar to ’saving for a rainy day’ with the exception that this is your excess funds beyond that that you will allow yourself to spend on discretionary purchases.

The final reason to invest is to make even more money. This used to make sense prior to 2008 when investments actually went up in value. It could still happen. There are money making opportunities out there. My guess is just as good as anyone’s. If you think the stock market is undervalued or commodities are undervalued or there is value in corporate bonds, you can increase your nest egg by those means. Just don’t get too aggressive or you’ll get burned like everyone else did lately.