MONEY matters

Fleetwood Mac, in their 1976 song “Don’t  Stop”, urged listeners not to stop “thinking about tomorrow” because it would soon be here. How does this relate to you? If you’re like most people, you can probably spend money without thinking about it, but you can’t save money without thinking about it. The truth is; saving isn’t a natural event. It must be planned.

Planning and budgeting require control. Financial planning involves looking into the future, facing financial reality and the sacrifices that it brings, and taking action. Financial restraint isn’t as much fun as spending with reckless abandon, but it’s a lot more fun than winding up broke.

Years ago, there was a commercial on TV where the actor would look seriously into the camera and say: we make money the old fashioned way, we earn it. He was speaking of a stockbrokerage company that successfully utilized that slogan for years. I mention this commercial because I believe we’re headed back to the old fashioned days, where a penny saved was a penny earned.

Prior to the recent stock market crash, our homes and investments were going up in value each year and in many cases, faster than many of us anticipated. That was good news for many, but it also came with consequences.  Due to the rapid rise in net-worth, many people neglected or just simply forgot how to save money during these times. And if you ended up not saving and spending too much one year, cheap money was available in the form of refinancing your home mortgage. Those days are gone.

The financial and emotional implications of a life crisis affect women more than men, according to new research findings from AARP Financial Inc. A survey of 600 men and 600 women age 40-79 looked at four life crises; divorce, death of a spouse, long-term job loss, and serious illness or disability. In all four instances, women struggled more than men.

Both men and women rarely seek professional financial advice in a crisis, rather, they rely more often on friends and family. But women who do seek professional advice usually feel well served, more so than men.

As stock markets around the globe start to rev up again, the siren call of higher returns will get louder and louder. The recent crash may have jolted you out of your slumber in terms of your asset allocation; you probably have more in bonds than you did before the crash, but that new pragmatic approach to investing may not stand a chance against the temptation of higher returns. Of course, with higher returns comes higher risk.

Before you make any significant changes to your portfolio, I highly recommend reviewing your short-term and especially your long-term financial goals. Taking on more risk while the stock market is doing well may feel like the smart thing to do, but the question to ask yourself is this: What’s the least amount of risk I need to take in order to reach my goals?

As our country racks up more and more debt, the U.S. Dollar depreciates further and further. Right now it’s a slow, drip, drip drip. It may be the case; that the dollar gradually heads lower during the next decade. Or, we could see this process accelerate overnight. No one knows for sure.

Over the past few years, I have formed strategic relationships with some key firms that offer well thought out and sound approaches to investing in currencies other than the U.S Dollar. These are firms with excellent reputations and decades of proven performance.

Is this a bear market rally we’re witnessing in the stock market or the beginning of a stock market recovery? Do I get back into the market now or wait a little longer? If I do get back in, what do I buy?

These are just a few of the many questions I’ve been asked recently. After the recent drubbing we received from the stock market crash, these are not decisions to be made lightly.

I know these are very unsettling times, and many people are quite anxious as they listen to media reports and watch stock indexes tumble. I believe governmental stimulus will help investors, but it is not surprising for the market to retreat during the plan’s initial implementation. Furthermore, both measures of money supply (M1 and M2) have surged since late August. Money supply growth and a fiscal stimulus package are a powerful boost to the economy that, in my opinion, will push the economy out of recession.