By Edward Leone Jr. DMD MBA CFP RFC
Contact Information: leonee@vzw.blackberry.net
We are one month into the year of 2014 and facing many uncertainties and challengers. Most of us took a bit of a beating in our equity portfolios for the month of January due to the very cold weather which suppressed consumption spending, issues of concern over slowing economies in some emerging markets and the Federal Reserve tapering strategy in the face of what appears to be very slight to nonexistent economic growth of the US economy. The Fed is in quite a predicament since there is not yet any positive activity regarding fiscal policy. There is much concern over international currency exchanges given the status of the Turkish economy, very very slow growth of the EU economy and high inflation rates in India, Brazil and Argentina along with unclear direction of the economic activity in China.
We are not learning from past experience regarding a variety of issues related to economic growth. A US government theme generated by the executive branch focuses on income inequality. What happened to the validity of former Presidents’ comments on this issue. Abraham Lincoln said in 1861 ” The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all.” Adams Smith and other economists historically have stated that the production of products and services is the economy while money and credit are symbols of economic activity. If you read Maynard Keynes, you would assume that money and credit are the drivers of the economy. His theories imply that money has value while I believe that money is a measure of value which facilitates trade and commerce. Unfortunately we find ourselves in an environment of the past many years, where our currency is being distorted as a measure of value. How would we get along if we kept changing the number of inches in a yard stick to measure length?
In the last several weeks we have been introduced to another retirement savings strategy known as MYRA. This is a minimal attempt at encouraging retirement savings. It is a start so to speak, but is funded with after tax dollars by the employee or saver with no fund matching by employers and is restricted to investment in government bonds only. As with the revelations involving ACA as we are experiencing the implementation of this legislation, we will learn much about the utility of MYRA as it unfolds.
Retirement savings strategies deserve many considerations by individuals before engaging in such an effort. Such issues as risk tolerance, tax efficiency, diversification, loan provisions, investment selections, employer contribution and facilitation, time horizons and distribution strategies are integral to a successful retirement journey. These matters should be engaged with the help and guidance of a qualified and adequately trained professional consultant such as a Certified Financial Planner.
For The Record:
DJIA 15,440.23
NASDAQ 4,011.55
S&P500 1,761.64
Suggested Reading: “The Great Depression Ahead” By Harry Dent
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