July 25, 2011

Stock Market Volatility, Debt and DC

As the folks in Washington, try to work out a deal on the debt, I was curious as to what the Wall Street strategists have to say so I checked around and you know what I found?

The same old drivel, the stock market will be volatile and you're investments should be diversified.  Really?  No kidding.

Diversification is a given, everyone knows not put all your eggs in one basket.

Volatility is what the Wall Street boys say when they have no idea what to say (which is the bulk of the time) so what are you supposed to do as an investor with that kind of insight?

Exactly!

This underscores my point that it is virtually impossible to beat the simple S&P 500 and why over 90% of supposed financial professionals fail to do so.

And since that is the point, why do you listen to Wall Street anyway?

Are you paying for that advice?  You shouldn't be, that's for sure.

Do you know what a fee of 'only' 1% over an investing lifetime is a fortune is costing you?

You can do this by yourself, you can and you should.

July 7, 2011

The difference between debt and deficit

The DEFICIT is the difference between what the government takes in and what it spends, period.  Historically, the US spends more than it takes in.  For a while in the late 1990's, we had a surplus, not a deficit which meant the government receipts (taxes, fees, etc) were actually more than what we spent.

DEBT is a financial term.  Companies, municipalities, cities and countries issue debt.  When a bank issues debt, its usually a CD.  The USA sells debt in the form of treasury bills and treasury notes and anyone can buy them, you, me, China, etc.  Remember those old posters from WWII era to buy war bonds, that was debt.  Parents used to buy savings bonds for their kids, that was debt.  When an entity issues debt, they are obligated to pay back the principal and interest.

Currently the USA enjoys a AAA rating for its debt which means the govt can issue debt at the best possible (aka lowest) interest rate and this is a sign of strength.  The deficit is a political football with both sides offering up solutions from cutting spending and increasing revenue (taxes).

If you have any questions like these that you think might affect you directly, feel free to contact me, I am available for coaching.  Remember I do not sell securities, stocks, bonds, mutual funds, insurance, nothing so you can rest assured that the information I give is without any bias whatsoever.