Senior Living
2008-11-01 12:01:00
A comment or two on the financial crisis
Question: What’s going on with the financial markets?
Answer: Anyone who has been watching the news lately is well aware of the turmoil in the financial markets. The national news is promoting doom and gloom while here in Wichita, we hear that our local economy is doing pretty well. So what is it really? A lot of that depends on your own personal situation of course, but the reality of the situation is almost every one of us has been affected by the current economic crisis in some way or another. Much like life, there are always two ways one can look at the same situation. Personally, one of my favorite sayings is one I learned from my daughter. One day I asked her whether she saw the glass as half full or half empty and her response was “ It’s neither half full or half empty, it’s just the wrong size glass.” Don’t you just love the mind of a teenager?
Ok, whether we do or we don’t have money invested right now, we have certainly been affected by higher gas and food prices along with many other consumer goods and services that have increased over the last few months. What does this mean to the economy? Well folks it’s all about consumer confidence. As prices go up you have less discretionary money to spend so consumer spending drops on things like entertainment, vacations etc. and less money goes into the economy. Then as prices drop we spend more, retailers are happy, we’re happy and everybody feels better. Of course, this is way over simplified but I think you get the idea.
So now back to Wall Street. One of the biggest rules when it comes to investing is that each person has the right investments for their risk tolerance and stage in life. For most retirees your focus should be on the preservation of your assets more so than growth. As Will Rogers once said, “The return of my money is more important than the return on my money.” For others this financial downturn can be a huge buying opportunity. Whatever stage you are in, here are a few tips that should help.
First, if you are still in the workforce, make sure you are paying yourself first. By this I mean use payroll deduction to put money into your retirement funds on a regular basis. Now is a great time because your monthly dollars are going farther. Second, make sure you are in the right investments for your age and risk tolerance. The biggest mistake most people make is putting too much emphasis on return and not enough on preservation. Third comes by good advice from my mentor. Make investment decisions based on fact not emotions. This of course is one of the hardest things to do when dealing with your money and is why sometimes having a neutral third party to bounce ideas off of is very critical. Finally, if you haven’t made any changes to your portfolio by now, it’s probably too late. There’s a good chance that the worst is already behind us. Remember the old saying “This to shall pass.”
