As Christmas Day approaches, it often feels like life stands still. Family is coming over to visit, cooking, buying gifts – the usual middle class, seasonal experience for most Americans, even in this very distressed time that we live in. ‘Tis the season to give thanks to our Lord for the many blessings, and for living in America.
However, while it may feel like life is standing still, the real world keeps moving. Events around the globe can instantly transform the value of your retirement nest egg. Nothing can diminish our Christmas spirit more-so than a major hit to our money. All of the New Year’s parties and college football bowl games don’t change the fact that if your money is in the market, it is exposed to possible losses.
As 2011 winds down, the Christmas Bulls are off and running. The market suffered 7 straight down days but then roared back, and recently was down again. Despite that bullish sentiment seen in the media, the market is continuing broad levels of fluctuation we have seen regularly since it regained its footing in 2010. These fluctuations I have discussed many times, but they are the result of massive market dislocation at all levels – government intervention, the massive balance sheet debts of governments, banks under duress and unwilling to offer loans to the small business community, extreme events in weather damaging business supply lines, geopolitical upheaval – the list is quite long and I could continue. My clients have wildly benefited from those up-swings, but none of the massive downturns. That is something we are very proud of here at Ty J. Young, Inc.
But back to task at hand – making financial plans for 2012. Whether 2011 has been a good year or a down year, there are steps to take and things to remember:
1) Multiple benefit changes coming for retirees. These include A) higher social security checks; B) Higher social security taxes; C) Increase in pension benefit guarantees; and D) increased IRA income limits. For more information on this subject, click here.
2) 2012 will have more, not less, upheaval. Plenty could happen in 2012, and the market will gyrate accordingly. Any solution crafted for the Eurozone will be sorely tested by bond offerings in Italy in January, where billions in debt will mature and need rolling over. I expect the Facebook IPO to be released, which is positive news and a big event to watch for. And for negative news, I wouldn’t be surprised if more weather events as well as global political events will have their impact on the market.
This potential upheaval will dramatically impact stocks, and if you are invested in the market, it could impact your personal retirement portfolio as well. You need to take steps to protect yourself from market losses, while still getting all of the gains. Having said this many times, you can find out how to protect your money from losses by giving us a call.
3) Control what you can control. You are in control of whether your money is at risk. You are in control of your choice of investments. You are in control of whether you own mutual funds – where you could potentially lose money – or whether your money is invested in a safe place, where you are guaranteed against losses, and where you can receive an historical reasonable rate of return. Work from a budget; consider your banking options based upon any new fees or charges they are applying; improve your personal balance sheet by de-leveraging debt; trade-in that non-performing CD for something with the same levels of safety, but with better rates of return. These steps and others are always welcome to maximize your wealth and better prepare for your retirement. It is never too late to get started on a balanced budget and a wealth preservation strategy.
If you are a client, you already know the following: predictions are a non-factor when you have protected principal investments, since global events do not negatively impact your portfolio.
From the Ty J. Young companies and family – have a Happy Holiday, Merry Christmas and a Happy New Year!