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There's always a reason not to invest, but don't let that stop you

There are over 75 million baby boomers who will be facing retirement starting in the year 2010. Imagine the impact of the largest demographic group in U. S. history drawing Social Security all at the same time. According to the Bureau of Labor statistics, when Social Security began there were 35 workers supporting each retiree. By the time the Baby Boomers are all over 65, that number is estimated to be two workers for each retiree. There could be a retirement crisis coming in America. I believe that millions of people are facing the toughest financial decisions of their lives and they are not prepared.

There is a chance that many Baby Boomers could be financially dependent upon the government, flat broke, living on food stamps or living with their children. What impact would that have upon the government or, worse yet, on my children and yours? Where will you be?

The only way that you can be prepared is if you have saved enough money to support your lifestyle in retirement. Saving and investing can seem intimidating. Don’t let it be. There are several sources of information. Learn enough to put yourself at ease and begin to plan for the rest of your life today. Financial freedom gives you freedom in every aspect of your life. Spend less than you earn. Put your money in quality investments. Diversify your assets. Dollar cost average into the stock market.

There is still a lot of fear about investing. I talk to many people every day. Some are afraid of stocks because of the economic risks, some are afraid of bonds because of rising interest rates, some are afraid to move. Do you know what the real fear should be? People can’t live on one to five percent returns. Everyone is struggling with this same problem. My mom is living off a fixed income, I am trying to grow my nest egg, and some of you are just starting out. It doesn’t matter who you are or how much money you have, we are all affected by the same economic environment and the same problems.

The cost of gasoline has everyone on edge. It is a reminder that inflation can still impact our lives and our retirement accounts. There are many factors affecting the oil prices; I personally do not believe that $40 a barrel is explained by the fundamentals of supply and demand. The situation in the Gulf region is having an impact. In the future, OPEC will face competition from new sources of oil from Russia, Angola, and Nigeria but until then we seem to be at the mercy of the oil barons.

One of the best performing investments throughout history has been stocks. According to Ibbottson, the average return on the S&P 500 over the past 74 years has been 10.5 percent per year. The hardest part of owning stocks is that they fluctuate in value. Adding a mixture of bonds, cash and a variety of small and large, growth and value domestic and international stocks helps to smooth out the ride. One key point to remember is the closing price on the Dow Jones Industrial Average is only important if you are cashing in your account today. If you need the money 15 years from now, today’s prices don't mean anything. The Dow Jones Industrial Average is higher today than it was 15 years ago when it closed at 2,480 on May 31, 1989. It has been higher for every 15-year period in history. Keep your attention focused on your future.

There will always be a reason not to begin investing. Don’t let it stop you. We are a society addicted to instant gratification. Investing has the best results when money is left to compound for 20 or 30 years. The very beginning is a slow process, but eventually your investment will have grown to a substantial amount.

Nancy Hadley is an Investment Representative with DA Davidson in downtown Sandpoint. She is currently accepting new clients. Reach her at 208-263-0210.

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Nancy Hadley

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retirement, investments

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