The word “investing” typically has a different meaning for everyone. Throughout our lives, we need to make choices regarding our finances, and many of them are based upon our phase of life. For those of you wondering what steps you should be taking given your current age, I have laid out a little road map that may help you in your 20s, 30s, 40s and beyond.
America is the land of opportunity – a land of prosperity where hard work is usually rewarded with positive results and advancement possibilities. However, the status quo in the U.S. seems to be that people will live right up to their income level and delay saving for “some other time.” In general, when it comes to a lack of savings, it is often a matter of high spending rather than low income. Of course, there are exceptions; situations when we need to spend more due to employment loss or unexpected healthcare bills, etc. For the majority, our lack of saving is due to excessive spending – a habit we need to get under control. So, I wanted to share a few simple strategies that can help increase savings without significantly changing your quality of life.
Six years have passed since the financial collapse of 2008 and 2009, and I feel it appropriate to re-visit some of the lessons learned during that crisis period. One of the most important lessons: operate your financial investments from a position of strength. A prime example of this strategy in action is the concept of buying low and selling high.
If you’re not frustrated with the markets by now, you must be taking better medication than I am (ha ha). Bloomberg TV, one of the largest investment reporting firms in the world, described 2015 as “the year that nothing worked.” The point? All types of money-making strategies – active strategies, passive strategies, alternative strategies – struggled to work in 2015. All seemed to post negative returns in a year that the markets ended fairly flat. Asset allocation funds, which focus on having a very well diversified portfolio, had the worst year for returns vs. their index since 1937 (Bloomberg.com).
I’m not sure how your year went, but I know that mine seemed to go by faster than usual. I hope that you and the ones you love enjoyed a successful year – not only personally and professionally, but financially, as well.
You better watch out! You better not cry! You better not pout – I’m telling you why … that’s right! It is Christmastime again, and that means lots and lots of shopping! It’s estimated that $79.4 billion will be spent shopping online this holiday season. That is a 13.9% increase from the 2014 numbers as measured by statista.com. Many of us are deciding to buy more and more of our Christmas goods online to avoid the rush and the crowds associated with the big box retailers; a buying behavior that is creating an amazing opportunity for consumers this year.
As we hunker down for the back stretch of 2015 and enjoy our pumpkin spice lattés, break out our sweaters and root for our local Top 20-ranked football teams, we have much to be thankful for. Reflecting on the recent news brought to light regarding Volkswagen, I am also very thankful that we, residents of Genesee County, can hold our heads high and be proud of the local men and women who are in charge of engineering as well as assembling some of the best made, most fuel efficient and environmentally safe vehicles in the world! GO FLINT! GO GM!
We live in an area with a history of greatness! Our roots run deep and our work ethic runs deeper. Our city of Flint, Michigan has had its ups and downs in the past, and thanks to some local entrepreneurs with great vision, we are again on the upswing.
In early August, the headlines were inundated with the news the Peoples Bank of China (PBOC) had decided to devalue their currency in relationship to the U.S. Dollar. Not only did they devalue their currency, but they actually devalued it against our dollar three times in the same week. This was the largest currency devaluation by China in over 20 years. Our markets in the States were quite rattled by the news, as it seemed to come from left field. The Dow Jones Industrial average* dropped 277 points the day after the announcement only to rally to close the day near the flat line. The U.S. Dollar also had a few very volatile days as it traded from .975 against the world basket of traded currencies to .960 a day later (roughly a 1.5% drop in the U.S. dollar in one day). There is much speculation regarding the reasons why China decided to take these drastic steps to weaken their currency, but looking deeper, it is most likely a combination of factors that persuaded the PBOC to make these moves.
You may have noticed recent financial headlines regarding the European Union and the inability of the country of Greece to repay their debt. Our clients continue to question, “Why does it matter to us in the U.S. if Greece defaults on their loans?” Greece has a Gross Domestic Product (GDP) of $237 Billion,* which is only half of the GDP of our Great State of Michigan at $449 billion as of 2014.** “Why should my investment strategy be impacted by such a small country? Greece has many great achievements in the history of the world, but why is it such a significant part of the current economy?”
Per Investopedia, a consolidation is defined as “the movement of an asset’s price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years.”*
A properly diversified portfolio will normally contain some amount of bond, or bond fund exposure. Bonds are contracts between an entity, i.e. company, municipality, or government and an investor that lends money to that entity. The entity agrees to pay the investor interest over an agreed upon time period and at the end of that period, the entity agrees to repay the investor’s principal in full (as long as the entity is solvent and able to do so).
