Financial Advice; As reliable as it’s bias…

I opened my fledgling Financial Practice in the fall of 2007. As any entrepreneur will tell you, the first few years can be brutal. From trying to define my business model to best satisfy my target markets needs, to getting the word out through marketing trial and error, it’s been tough.

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There’s a change in the air, hopefully…

As 2008 draws to a close, many are fearful of what next year holds in store for us. As an observer of the recent financial crisis, I am optimistic that many of us are beginning to awaken to the poor financial decisions that got us here in the first place. As we gradually feel the hangman’s noose of our financial creditors tighten, we’ve started replacing ill conceived spending habits with prudent ones. This past summers grossly inflated gas prices provided an additional wake up call, as we were forced to begin making choices on how best to spend our finite incomes.

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The Nation's Debt Problem

Take a look at our nation’s ever increasing deficit at http://www.brillig.com/debt_clock/ and you’ll get a great visual on how our own Government is failing in the area of fiscal responsibility. With our leadership unable to manage its finances, it stands to reason that those for whom it serves would also be struggling in this endeavor. And, as the American consumer provides the horsepower for our economic engine, it comes as no surprise that we are encouraged to keep on spending.

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Caveat Emptor

“Caveat Emptor” is Latin for the phrase “Let the buyer beware”. What this implies is that the buyer is responsible for examining the condition of an item prior to buying it. Unless specifically stated, as in the case of a guarantee or warranty, once you’ve taken possession of the item, it is yours for better or worse. A similar principal applies when entering into a contract, and partially explains why we often experience “Buyers Remorse” after we’ve signed our John Hancock. Questions arise like, “Did I miss something in the fine print?”, or, “Did the salesman disclose everything about the item?” Perhaps this explains why we have misgivings when it comes to dealing with sales people. Unfortunately, when it comes to financial issues, such as saving for retirement, we often have no choice but to turn to a sales professional for guidance. Or do we?

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Reality Check

So, it’s happened. Unprecedented in our lifetimes is the financial crisis that’s upon us. It is amazing to me that so many were caught off guard. As a steward of my client’s money, I must admit that I too have been amazed at the depth and breadth of this global event. And, it continues to spread like cancer to all corners of the globe.

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The credit markets meltdown

It was disheartening to see the Government pass the $700 billion bail out plan last week. Supposedly, the intention of the plan is to stabilize the credit markets and ultimately restore the American consumer’s ability to get the credit that we “need” and “deserve”. Immediately after the bill was passed by the Senate, and prior to it’s passage in the House of Representatives, one misguided senator justified the Senate’s decision by explaining that if consumers were unable to borrow money, they would be unable to purchase goods such appliances and other household items. What I’d like to know is, “What ever happened to paying cash”? Credit Cards didn’t even exist prior to the 1970’s, and yet many of us are so frightened by the prospects of being denied credit, that we are willing to give even more power to the Government. Yes, we might have been given a brief reprieve, but creative financing and credit extensions are not the solution to our long term problems. And, as we shift personal responsibility from the individual to the Government, we are yet another step closer to Socialism.

No Load Mutual Funds vs Load Mutual Funds (the on-going debate)

What are the differences between No Load Mutual Funds and a Load Mutual Funds, and which is better?

No Load Mutual Funds are mutual funds that don’t carry a sales commission. They’re typically found at discount brokerage firms and can be purchased directly without using the services of a broker.

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Retirement Number

I recently read an article discussing the ING television ads which show people performing their daily activities while carrying a sign under one arm. On each persons sign is a 6 or 7 digit number that represents that persons required nest egg figure. The author explains that rather than focusing on a specific number, the saver should focus instead on how much income will be needed, and then plan accordingly. He suggests that the reader use an online retirement calculator to derive his specific income need based on various data inputs.

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