Many unsophisticated Investors buying complex financial products commonly misunderstand their suitability in an investment portfolio.
There is a misperception that investment products promising high returns and the maximum amount of safety do not come with risk. Lifestyle risk is the chance that some investments may not reflect our needs nor synchronize with our future lifestyle. The reason is the current assumptions for our investments are too vague since we cannot possibly foresee future events that may significantly affect our lives. We must prepare to live with uncertainty. Do not be simple in your financial decisions. Not all poems rhyme and not all stories have happy endings. These include the loss of a job or a loved one or both. Investments should be pliable to adjust to the needs at different stages of life as well as meet any unforeseen events that may unfold that affect our health, career or family. Therefore, investors need to be aware that one particular investment (putting all your eggs in one basket) may not be the solution that procures a safe secure financial future.
“I took a test in Existentialism. I left all the answers blank and got 100.”
Investment companies and advisors who work at these financial institutions have a responsibility to consider not only the suitability of each investor but to carefully consider the appropriate diversification of his other investments as well. Decisions an investor makes today can significantly affect his financial stability. If circumstances change, the original reasons why he purchased the product may also change. If you went to the doctor today the doctor might prescribe something for your current ailment. But the prescription will only address the needs you have now because neither you or doctor know what your needs will be twenty or thirty years from now.
Three Steps Toward Reshaping Your Financial Plan After a Divorce
“A story has no beginning or end: arbitrarily one chooses that moment of experience from which to look back or from which to look ahead.”
― Graham Greene, The End of the Affair
Life happens. Some of it we plan for, some of it we don’t. One transition that cannot be predicted is a divorce. Although it’s seldom in the plans, divorce ends half of marriages. For adults 50 and older the divorce rate has doubled since the 1990s. Many adults will have to divide up the saved assets that had been put aside to share in retirement. Even if both partners worked and saved well for their retirement, there is often a gap between partners when it comes to levels of earnings and wealth. This disparity can disproportionately affect women, as they may have taken time off for child-rearing or family needs. In this article, we will go over some factors to consider regarding divorce and your retirement.
It is not the strongest of the species that survives, nor the most intelligent. It is the one most adaptable to change.
How much should you save? How much should you spend in retirement? How much do you leave to your children? How little do you leave? What happens if some unforeseen event happens? Is your investment portfolio safe in case of a sudden change in the world economy?
I was traveling on family business to the Emerald City, Seattle, Washington. While there I visited the 605-foot tourist trodden tower called the Space Needle which was built to celebrate the 1962 World’s Fair. As I observed the enormous edifice from the base, it appeared to gaze in soulful benediction over the sprawling city. After I stepped into the elevator it swiftly lifted me to the top floor. As I exited the doors high above the city, I walked onto the deck of the brightly lit observation turret. The sun’s rays were so bright they seemed to kiss the expansive windows as the visitors inside enjoyed the spectacular views. Near a set of elevators, a teenage attendant with red streaked hair was talking excitedly to a group of eager tourists. He spoke about the substantial sturdiness of the structure and how it was riveted into a foundation of reinforced steel and cement that can withstand a 9.1 earthquake as measured on the Richter scale. He added that the materials in the design were not only strong but also very flexible. In case of a hurricane, the tower had the special design capability to sway back and forth on very windy days even with winds of 200 miles an hour! The elevator may have to slow down during these conditions, but the structure was built resilient enough to adjust for sudden changes in the forces of nature. I thought of the many modern buildings and physical structures built in this way to withstand the daily effects of nature and weather, including our human bodies. If they were not flexible like the Space Needle structure, they would also suffer the strains of daily living causing us discomfort and pain.
“Life is like a mirror, we get the best results when we smile!”
Looking directly into a mirror gives you one perspective of yourself. However, if you turn the mirror at a right angle to another you will discover several images of yourself. Some may appear distorted and backward, like in an amusement park fun house. Nevertheless, each one allows you to see yourself differently. Similarly, the choices available to us when making decisions with our money can appear to be hard to figure out as well. Like the right-angle mirror, we are forced to view our finances differently even though they are the same.
Whether you are a budding Millennial or an aging baby-boomer our attitude and behavior regarding money and the way we consume it is crucial.
Bulls and Bears
Many experts consider investing in the stock market the best way to grow wealth, especially if you are young and have a long investment time horizon. However, it can be difficult to avoid much of the daily market “noise,” and you may start to question your financial decisions. Such seemingly extreme volatility can have even the most steadfast investor feeling a little unsure on occasion. The deluge of unprecedented news and the responding economy may leave investors questioning how best to proceed. Better to hunker down and ride it out? Sell? Invest in more conservative products?