Going ‘Green’ Part 2: What Should You Do to Protect
Your Nest Egg?
The issue in these turbulent times isn’t just the
price of oil
By Jeffrey D. Voudrie, CFP
July
10, 2008 - As the summer heats up, so does the rhetoric about the energy
crisis. The presidential candidates are taking political shots at each
other’s solutions to the problems, while everyone else in Washington is
playing the blame game. Even OPEC is washing their hands of the matter,
blaming ‘speculators’ for the current crisis.
As investors, all the arguments and finger pointing
do nothing to help our bottom line. If we wait for our own government
or powers abroad to take action to benefit us, I’m afraid we’ll be
waiting a very long time.
But the good news is that you aren’t at the mercy
of feuding politicians or oil-producing nations. There are steps you
can take to protect your nest egg and your standard of living.
One important factor to understand so that you can
navigate these turbulent times is that the issue isn’t just the price of
oil. The supply/demand problem we discussed last week is occurring
across the board with all natural resources.
Just as China and India are increasing their demand
for oil, they’re also increasing the demand for food products, such as
soy beans, corn, and wheat.
As supplies tighten and demand increases, we’re
seeing a world-wide increase in food costs. Ethanol production and
drought conditions in some wheat-growing areas like Australia are only
adding to the problem.
The recent floods in the Midwest have also
destroyed many acres of grain crops. All of this means that consumers
shouldn’t expect to see relief at the checkout any time soon.
Since consumers world wide have to spend more of
their money on food, we see two obvious results. First, they are less
optimistic about their financial situation, and second, because food and
fuel is consuming a larger percentage of their disposable income, they
are cutting back their spending in other areas.
We’ve already seen this here in the United States,
where one large home improvement chain recently reported a decrease in
big ticket purchases and a sharp increase in repair items.
When consumers are feeling the pinch, it’s usually
a hard time for the stock market. The temptation might be to pull out
of equities all together and head for the ‘safety’ of cash, bonds or
CDs, but these investments have their own set of risks. Interest rates
are quite low and these investments give you no protection from
inflation.
Real estate often performs well in an inflationary
environment, but we are still feeling the effects of the real estate
bubble and sub-prime mess. Savvy investors can take advantage of the
situation, but if you don’t know what you’re doing, you can certainly
get burned.
In these uncertain times, investors can make an
even more costly mistake: believing the hype about ‘miracle’ investments
that promise to solve all your problems. These products are promoted as
ways to protect your money and give you a bonus for investing, but
instead they lock up your money for years, give below-average returns,
and provide a handsome payday for the advisor.
If ever there was a time to keep control, access
and flexibility over your money, it’s now. In these difficult markets,
you must be able to take quick action to protect your money and have the
flexibility to take advantage of changing opportunities.
The good news for investors is that you can be in
control of your financial future. You don’t just have to sit back and
take what the markets give you. Yes, you will need to tread cautiously
and be highly selective in the sectors and countries in which you choose
to invest.
But you don’t have to be at the mercy of
pre-packaged, mass-marketed products that do little to help you meet
your financial goals.
There are times you might need to ‘stand aside’ and
let the markets work through an issue. Remember, all the money managers
are seeing the same trends and what used to take several days to play
out is now happening in a single day. This is increasing volatility.
Don’t let the current energy crisis turn into a
financial one for you. Maintain control, access and flexibility over
your money and keep a close eye on your investments. This isn’t the time
to simply buy an investment and hope it does OK over the long-term.
Instead, opportunities and risks must be closely managed—something few
advisors do.
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.
Keep up with the latest news for senior citizens, baby
boomers
July
10, 2008 - As the summer heats up, so does the rhetoric about the energy
crisis. The presidential candidates are taking political shots at each
other’s solutions to the problems, while everyone else in Washington is
playing the blame game. Even OPEC is washing their hands of the matter,
blaming ‘speculators’ for the current crisis.