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Guarding Your Wealth for Senior Citizens
Changing Investment Landscape Requires Radical
Change in Our Thinking
Old approach may hinder ability to maintain
standard of living in retirement
By Jeffrey D. Voudrie, CFP
 Nov. 9, 2007 - Seeing the ‘lay of the land’ can
help us invest more effectively. Investment landscapes can change,
sometimes very quickly. I believe the investment landscape we’ve
experienced for decades has been changing and that the speed of those
changes is increasing. If you agree, you may need to make significant
changes in how you invest.
I believe that preserving and growing wealth over
the next 5-10 years will require a radical change in the way we think
about investing.
Traditionally, you could invest in the large, well
established American companies and see your wealth outpace inflation.
When it came time to tap your investments for income, you would sell
most of your stocks and buy the high-quality long-term bonds of those
same blue chip companies. The strategy was straight-forward and
relatively simple to execute.
That’s not the case any longer.
Those who continue to take this approach are going
to find that they aren’t able to maintain their standard of living when
they retire - if they can ever afford to retire. Those using US bonds
for income are going to find it hard to afford gasoline, milk, meat and
other the other essentials because of increasing prices.
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Here's what Jeffrey
Voudrie wrote last year in SeniorJournal.com |
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OIL: The 800 lb.
Gorilla
Don’t be fooled by short-term trends in the
price of oil
By Jeffrey D. Voudrie, CFP
 October 9, 2006 - The price of oil is down almost
25%. Gasoline prices at the pump are down almost $1. Make no mistake,
though, the returns on your investment portfolio over the next 10-15
years will be determined by energy investments. Invest wisely and
prosper; don’t, and risk peril.
Don’t be fooled by short-term trends in the price
of oil and other energy-related commodities. Don’t be influenced by the
talking heads on the evening news or cable television who say that there
is a speculative commodities bubble and that the price is set to fall.
Although the price of oil will continue to fluctuate widely, the overall
trend is clearly up.
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Why am I being so negative? It’s not because I am
against America. I’m not. It’s my job, though, to survey the land and
prepare my clients for what is ahead. Just because there is a likelihood
of thunderstorms doesn’t mean it isn’t going to be sunny tomorrow.
We in America have gotten ourselves in a pickle.
We’ve been spending more than we make for years and years as individuals
and for decades as a country. Rising home values have made that
possible. But surprise, home prices won’t keep going up forever. That is
going to affect how much we can spend.
Interest rates have only gone up marginally in the
last couple of years and now we have the sub-prime mortgage fiasco. What
would happen if interest rates went up 3% or 5%?
The Federal Reserve is walking a knife’s edge.
They’ve lowered interest rates to keep the mortgage mess from pushing
our economy into a recession. Lowering interest rates has caused the
value of our currency to drop even further. That means everything we buy
from overseas (including oil) has or is going up in price. That’s
inflation.
Normally, the Federal Reserve will raise rates to
prevent inflation. Doing so now will only cause more mortgage defaults,
slow our economy and push us toward recession. So they have a choice…a
recession based on a slowing economy or a recession resulting from
inflation. Neither is good for investors.
The U.S. used to be the place to invest. It
provided safety and good long-term returns. My concern is that it’s no
longer going to be the case. This is a global economy and we can’t look
at the returns of our markets in isolation. Sure, our markets may be up
15%, but what good does that do us if the purchasing power of the dollar
has fallen 20% (like it has against the Canadian dollar in just the last
6 months)?
Over the next 5-10 years, preserving and growing
wealth will require a change in thinking. We are going to have to invest
in markets and companies outside the U.S. Europeans have been used to
dealing with multiple currencies for decades. We will increasingly find
ourselves needing to do the same thing.
We need to identify the economies of the world that
are strong, stable and growing as well as those that are weak and
struggling. Investments, including cash, should be shifted away from the
weak and struggling into the strong and stable.
I expect that the cash in my clients’ accounts may
at some point be kept in a more stable currency such as the EURO.
Investing in local exchanges around the world, such as Hong Kong,
London, Australia, Germany or Canada is going to be as common as
investing in the New York Stock Exchange is today.
Not many advisors nor firms are ready for this
change. And time is running out. That’s why I am rushing to develop
software that will allow me to offer my clients this capability. That’s
why, even now, I have implemented strategies that take advantage of
strong world economies. Perhaps you should, too.
If you have a specific question or would like more
information, give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
I will answer your financial question FREE.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive that may not have appeared in
SeniorJournal.com.
Guarding Your Wealth for Seniors, on
SeniorJournal.com, is
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to select
private clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For bookings, email
jeff@guardingyourwealth.com.
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