Protecting Your Financial Security in a Volatile Economy

PROTECTING YOUR FINANCIAL SECURITY IN A VOLATILE ECONOMY

"These days, I'm less worried about the return ON my money than I am about the return OF my money." Those words from Will Rogers, the Cowboy Philosopher of The Great Depression, strike a familiar chord today, as millions of Americans try to deal with the economic two-by-four that clobbered us this past year.

So, what can we do to protect our money in these rocky times? A lot! As we weather this current recession, we should look at the two goals of (1) protecting the assets we have and (2) getting back to the business of building additional assets for the future. Here are some suggestions:

Keep everything in perspective. In general, if you had a carefully planned, well-balanced portfolio prior to all the recent turbulence, it will most likely still be in good shape today. Also, keep in mind that the overall growth of our financial marketplace over the last century has not been a one-shot fluke. The Dow Jones Industrial Average -- a consistently reliable indicator -- has enjoyed steady expansion, with periodic corrections, over the years. This long-term growth trend offers continued opportunities to help men and women achieve their financial objectives.

THE FINANCIAL MARKETS IN PERSPECTIVEAt the end of 1899, the Dow Jones Industrial Average closed at 66.08. In 1929, right before the Big Crash, the Dow peaked at a robust 386. By the end of The Great Depression, it had struggled back to 200, then shot up to a dizzying 700 during World War II.In 1966, it broke 1,000, fell to 570 in 1974, then climbed to a record high of 2,922 in 1987, only to fall back to 1,738 that same year. It passed 3,000 in 1991; pushed right on by 4,000 and then 5,000 in 1995; hit 6,000 in 1996... and kept right on going. In 1998, the Dow broke 9,000, and was well past the 10,000 mark in the early days of the new century, continuing to move well past 11,700 in 2000.Source: Dow Jones & Co., recorded in The World Almanac, 2001

Don't make any hasty changes. There is always a temptation to bail out when markets are in decline. However, those that have a plan, and who stick to it, will generally come out okay.
Use dollar-cost-averaging techniques to continue building (or rebuilding) assets. Many advisors agree that this is one of the best ways to handle market volatility. With dollar cost averaging, consistently continue to put a pre-determined amount of money into your accumulation vehicles, regardless of market ups and downs. During down times, this enables you to purchase greater amounts of assets.
Think long term, especially if you're young and have time, and keep your eye on the big picture. Three days of rain does not add up to The Great Flood. Remember why you bought a certain investment mix, and be prepared to stand firm on routine market corrections, even recessions.
Get good advice. This may not be the time to throw money around willy nilly, or to go it alone. Meet with an experienced advisor, such as myself, and we can work out a strategy together. I can help you analyze your needs, situation and risk tolerance. Then, we can develop a plan to help protect and keep building wealth during these rocky times.

Final thought to help put our current economic times in perspective: Today's senior generation, those 75 years of age and older, were born into the boom era of the 1920s, struggled through the 1930s decade of The Great Depression, followed by four years of sacrifice during World War II. Then, they came home and built the strongest economy the world had ever seen. In short, make your plans, map out your wealth accumulation strategy, and then take the ups and downs in stride.