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by
Gary F. Restall
Money Matters
Thinking of my next article for our local area, the age-old financial problem clearly came into view having just read several professional publications in the last few days.
As the July-August 2000 issue of Financial Advisor stated, there are excesses in just about everything in the US society. I’ll mention two of them here. Excesses in overspending with the "new" wealth with excesses in extended credit and no savings. Seemingly there is no regard for the next cycle of downturn. There are already the first signs of a slow down in the economy locally evidenced by shorter lead times for orders in many sectors. Even though a tight labor market in our area is still the current norm, layoffs are widely known about in some industries on the west coast. Some professional analysts are even projecting a recession. When? In twelve months, 18 months, or 24 months? It depends on different scenarios.
Are you prepared?
Another article I recently read dealt with the huge stock market volatility of April 4th with losses and swings of over 500 points within one day. "One of the weirdest and wildest days in stock market history," The New York Times said. Another quote in the same paper stated, "Volatility was redefined on Wall Street that day."
A question being asked more frequently is, "What is the next swing and/or investment fad in this "new age" economy?" Allow me to suggest that instead of living day-to-day like some people, that you think and plan ahead 6 months to at least 1 year. Not just for retirement, but for everyday living ... now. Why not build flexibility into your financial house?
Why 6 months to a year? Simple. Yes, changes can be made instantly. However, many times it may take longer to 1) modify the "thinking" and the reaction to developing events, 2) to implement some of the subsequent strategies, and 3) to wait for them to take effect.
Bottom line. Are you ready for whichever cycle we enter? Will you continue to reap the benefits of the strong economy while holding on to the proven, conservative safety-net in case the economy does follow through on the slow-down and even the predicted recession?
Many seasoned planners recommend building that often-heard solid foundation first before "playing" in the market with investments. What is that solid foundation? Simple basics many ignore to their peril. First, having a 6 month Cash Reserve in case of emergencies and opportunities that come along. Second, eliminating ALL consumer debt. Third, evaluating the risks and acquiring the appropriate insurances - health, disability, life, and long-term care - to cover the potential needs now and in the future. Fourth and fifth, have the estate planning completed and tax management strategies implemented. Finally, the sixth area of investments and retirement. Only then should these enter the picture. Yes, these ARE important and even critical in how they are addressed. But, are you prepared for the unexpected... NOW? As Stephen Covey says, "First things first."?
From my past personal and professional experience, I have found that most people do not have ALL of the basics covered or are out of balance. As the saying goes,
"they are waiting for an accident to happen." Where do you stand?
There are many sources available to the serious-minded who want to "make sure" they are prepared for all scenarios seeking out what is appropriate for them. Please see the News and Articles page on my website www.agsfinancialservices.com for specific help in what to consider, where to look and what to ask. Your future’s brightness and success may depend on what you do now.
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Gary F. Restall of AGS FINANCIAL SERVICES is an independent full-service Registered Financial Planner, Registered Investment Advisor, and an Insurance Broker. His office is located in Northboro and he can be reached for additional questions. You may also visit his educational website at www.agsfinancialservices.com.