When I was younger, there was a commercial on TV where the actor would look seriously into the camera and say: we make money the old fashioned way, we earn it. He was speaking of a stockbrokerage company that successfully utilized that slogan for years. I mention this commercial because I believe we’re headed back to the old fashioned days, where a penny saved was a penny earned.

Prior to the recent stock market crash, our homes and investments were going up in value each year and in many cases, faster than many of us anticipated. That was good news for many, but it also came with consequences.  Due to the rapid rise in net-worth, many people neglected or just simply forgot how to save money during these times. And if you ended up not saving and spending too much one year, cheap money was available in the form of refinancing your home mortgage. Those days are gone for now.

So as we move into a new year, think about not just getting in good physical shape, but into good financial shape as well. If your savings muscle is flabby, put it to work. Start with small baby steps, setting monthly goals that are attainable. Get back into the habit of saving and you’ll feel your financial integrity level rise with your savings account. If you need a little extra help, please read or re-read the seminal book on money-Your Money or Your Life.

If spending is your challenge, you’ll need to flex your frugal muscle. Going back to the book, Your Money or Your Life; realizing that you trade your life energy for money, and that every time you spend money you’re spending your life energy, that awareness ought to create a speed bump on the road to spending.

Bottom line, reaching your short-term as well as long term financial goals is going to take good old fashioned saving. The sooner you have a plan on how to reach your goals, the sooner you’ll reach them.

Happy Thanksgiving!

As we approach 2010, it’s amazing and scary to think how close the world came to another Great Depression. For my money, that was too close for comfort. Although the global economic recovery is still fragile, at least we’re recovering.  With the New Year approaching, there are a new set of indicators to pay attention to. Top on that list is China. I’m not that concerned with China holding close to a trillion dollars in reserve, since selling dollars wholesale would certainly be mutually assured destruction for the U.S and China. What concerns me is U.S unemployment staying at high levels next year and the congress looking for scapegoats.

If we allow China to become the scapegoat, and this theme starts to catch on with members of Congress, we’re going to have problems. Next year, pay close attention to the debates being held in Congress and see if any anti-China legislation starts to gain momentum. Of course, China’s currency policy is manipulative and needs to be reformed. But telling one of your largest creditors what to do, well, that just isn’t going to work. Whether we like it or not, the Chinese finance minister is our lender in chief. How we allowed our country to get so deeply in debt and become a debtor nation instead of a creditor nation is a story that will be told for generations to come. But it is what it is, and right now, China has the upper hand.

Here’s my main concern next year. Congress decides to punish China for manipulating there currency. At the same time, Congress also wants to take the heat off of them, so they allow legislation like this to gain traction. Eventually they’ll turn our rightful anger for decades of economic mismanagement against China. China, being a proud country and realizing they hold most of the cards, calls our bluff and starts making large dollar sales to retaliate against our policy. This causes a run on the dollar of a magnitude we have not seen in our lifetimes.

In this hopefully unlikely scenario, exchange controls in the U.S get put into motion immediately and all citizens are unable to move any money outside of the U.S.  This exchange control law was beefed up during the Bush administration Patriot Act debate.

Playing offense means you have a small nest egg of money invested outside of the U.S. This is absolutely legal and above board. The law states you must report all foreign bank accounts to the IRS, which you do when you prepare your tax return and the law also states you need to pay income tax on all money earned globally-check.

We are living in unprecedented times. Are the odds of this scenario happening likely? They’re not. But why do we buy life insurance? Why do we buy homeowners insurance? In the event the unlikely happens, we’re covered.

Next year, pay close attention to the rhetoric coming out of Washington. If you hear signs of China bashing getting louder and more mainstream, call me and we’ll discuss how best to play offense.

From my perspective as a financial planner, investors seem confused about bond funds and fixed income investing in general. As the stock market continues on its upward path, please don’t lose sight of how important it is to maintain an asset allocation to bonds or bond mutual funds. To help you make sense of all this, here’s another link to some outstanding info from Vanguard.

Remember as well, being financial empowered means increasing your financial intelligence. Here’s your homework: http://www.vanguard.com/jumppage/bond/

Have a Happy Thanksgiving. And my gratitude to all of you that take your precious time to read my posts, I sincerely appreciate it.

According to the Investment Company Institute, investors poured $220 billion into bond funds during the first eight months of 2009, compared with just $27 billion in 2008.

What happens to bond funds when we start seeing interest rates rise or inflation rising? Vanguard has an excellent article that helps explain some of these possible scenarios. To learn more, click here:

Vanguard

The New York Times has a great article on money questions to discuss prior to getting married.  For those of you that are married but find it challenging to discuss the topic of money, there’s something here for you as well. Here’s the link to the article:

Money & Marriage

OK-well it stinks that we lost the 2016 Olympics to Brazil, but at least from an investment perspective, there may be a silver lining here after all.

First some facts: Brazil’s leading stock market index (BVSP) is up year to date, in US dollars, up 114%. Compare that to the S&P 500 year to date-up 17%. That’s quite a notable difference. Second, just think about the amount of investment that’s certainly going to pour into Brazil now that they locked up the 2016 Olympics. And finally, the Brazilian economy is well positioned for global growth.

One of my favorite ways to play the Brazilian stock market is through ETF’s-specifically i-shares MSCI Brazil Index. (EWZ). This is not a recommendation to purchase this individual fund, as you need to do your own research and make sure you understand the risks and rewards fully of this fund before you invest. But get busy doing your research.

The financial and emotional implications of a life crisis affect women more than men, according to new research findings from AARP Financial Inc. The survey of 600 men and 600 women age 40-79 looked at four life crises; divorce, death of a spouse, long-term job loss, and serious illness or disability. In all four instances, women struggled more than men.

Both men and women rarely seek professional financial advice in a crisis-they rely more often on friends and family-but women who do seek professional advice usually feel well served, more so than men.

“The fact that many people do not know where to turn in times of life crisis means that the financial planning industry has not effectively communicated its care and concern” said Mac Hisey, president of AARP Financial. “As an industry, we must do a better job of encouraging women to seek advice from financial professionals during life crises, as immediate, expert advice can make a critical difference in families’ finances for the long term”  I couldn’t agree more!

2010 may prove to be a great time for boomers to create a tax-free income stream for retirement, thanks to the opportunity to complete a ROTH conversion without income limits. 57% of high income boomers are not aware that income limitations on conversions will be eliminated in 2010.

To learn more about the benefits of ROTH IRA conversion, please call or email to schedule an appointment.

Paul Krugman, Nobel Prize Winner, recently held a Q & A with his NYT readers. If you’re interested in reading the latest news about the global economy , especially the U.S economy, click on the link below and it will take you to his responses. I highly recommend taking the time to read it.

From everything he said in the Q & A, the most intriguing to me was the following:

“Q. What are the three most important factors to track (and over what time frame) to gauge if the economy has finally turned the corner. How critical are household wealth and consumer debt in influencing the above factors – are they lagging or predictive indicators?

A.  What I can tell you is what I’m watching. I’m watching unemployment insurance claims – I won’t feel that we’re over the worst until those drop well below 400,000 a week. (they’re still in the mid-5s) I’m watching the ISM surveys, looking for signs of strong (not marginal) growth. And I’m watching the monthly employment reports.

Wealth and debt are predictive factors, not indicators. And for what it’s worth, they’re predicting a long, hard slog.”

Paul Krugman Q & A

That’s the title of the lead story on the Huffington Post website today-9/25/09.  I encourage you to watch the 5 minute interview with Inspector General of TARP-Neil Barofsky. It’s not good news, but it’s the truth. Kudo’s to the Huffington Post for their excellent investigative journalism-well done.

Click this link to watch the interview:

Neil  Barofsky-Tarp Inspector-9-09