As I talk to more and more people about their experiences over the last 18 months during what the popular culture has called the “Great Recession,” I am witnessing some common themes of concern regarding financial security:
1. The stock market is up considerably since its low in March of 2009, but how do we know it won’t “crash” again tomorrow? We don’t know! It used to be common knowledge and belief that you knew you would have some ups and downs in your investments, but in the long run you would achieve profits by investing in market. From the conversations I have had with many people, it seems like there is this general sense they are waiting for the “next shoe to drop.” It reminds me of the weeks and months after 9-11 where I was glued to the cable news networks waiting to hear about the next terrorist attack. I sense an underlying fear in most individuals and business owners that they are waiting to see how everything works itself out. The danger of this view is that you become a market timer and try to “guess” what your latest stock holdings will do. The danger is also that you get so consumed with things that you can’t do anything about and fail to make a difference in your life and the lives of those you care about the most.
2. What will higher taxes do to my future plans? I have been hearing this one especially since the passing of the health reform bill. There is a general confusion of what is and what is not in the legislation and I think people are skeptical of what may happen to their individual tax situation in the future. For the clients I work with, I tell them there is one thing for sure: their taxes will go up but how much we do not know yet. I tell them it is important that we continue to plan and make the best tax and financial planning decisions we can at the time with the information available to us.
3. How do I know I have reached financial security? I hear this quite often. An individual may also say, “how do I know I will not run out of money?” These are important questions to address no matter what the economy and the stock market is doing. Where many people fail in their quest to achieve financial security is that they fail to define what financial security is for themselves but instead they allow the “talking-heads” on TV or the magazine covers to define it for them. Until you define what is most important to you regarding financial security and lay out a plan to achieve it, you will never achieve it.
So there are some questions people have right now is these difficult times, however, with all the chaos around us it is important to remember that you are in control of your situation more then you believe. We need to control the things around us that we can, such as how much we save, how much we spend and what we invest in and let everything else take care of itself.