By Edward Leone Jr. CFP RFC DMD MBA
Contact Information: edleonedds@gmail.com
The beat goes on as the world around us becomes more and more complex and violent. While the US economy seems to be on a steady but slow and gradual economic recovery, it appears that Europe is stagnant regarding economic advancement and Africa is suffering along with many Central American and South American countries. There are segments of the Asian economy that are showing growth. China is showing slower growth patterns. South Korea has been a magnet for economic growth and efficient production. It is apparent that they are beginning to experience the same dynamics which have burdened Japan for some 20 years now regarding population demographics and household debt.These conditions continue to create challenges for all of us regarding provision for life style expense and saving for education and retirement. Many do not give attention to planning for the unexpected. Insurance products, estate plans such as wills and trusts along with emergency cash savings are key elements in surviving such potential events.
One of the lifestyle expense challenges which is developing is the elevated cost of health care. According to a Robert Wood Johnson Foundation study, the trend regarding hospital consolidations and the merger of medical practices under this strategy in the health care industry is causing higher costs since entities are interested in improving bargaining power as they grow larger and negotiate with third party payers instead of creating enhanced and more efficient delivery of care. This is not good for the future and will only be corrected with capitalistic strategies which introduce reductions in receivables, pricing competitions, public awareness of what is available and what is necessary instead of what will my insurance pay. It would be most ideal for the consumer to have total control over benefit assets along with the decision process regarding what to buy and when for health care needs.
Regarding domestic issues, the Federal Reserve Bank has been a focus in resent weeks. It appears that the end of QE and the obvious increase in interest rates which will occur will be small and gradual over a period beginning in 2015 and extending into 2017 according to PIMCO. This means that those who desire to generate fixed income returns from investments will continue to be challenged, but equity markets are not likely to take a big hit in the near future. Equity investment are volatile in the short term, but according to an article in a recent issue of Bloomberg Business Week, investors lose more money trying to time equity markets rather than holding investments over a long time horizon. Jeremy Siegel of the University of Pennsylvania has done extensive research regarding this issue. His work is worth the read. Another issue facing investors has to do with the concept of developing a diversified portfolio. This can be a challenge depending on risk tolerance and the time horizon an individual has available. The guidance of a Certified Financial Planner in this effort is essential.
The election season is upon us. Many will be voting on local and national issues by mail in coming weeks. Let’s see what happens. Do not avoid your responsibility on this function.
For The Record:
DJIA 17,279.74
NASDAQ 4,593.43
S&P 500 2,010.40
Suggested Reading: “Knowledge and Power” By George Gilder
Leonesmoneymonitormonthly's Blog 