We’ve all watched the news reports from Japan with sorrow and horror. The devastation is unbelievable, and it’s hard to imagine having to endure such tragedy. Our hearts go out to the victims and we pray for them to find comfort and peace as they seek to rebuild their lives and mourn the loss of loved ones.
As we contemplate these things, it’s natural for our thoughts to turn to the ripple effects of the event on our world economy, and to wonder how this tragedy might affect us down the road. Obviously, we didn’t just see our town washed away, and so we can’t compare our concerns to theirs, but we will feel affects, and have felt them already.
I had the chance to speak with Baltimore financial planner John Hauserman this week. He offers some advice on how we can prepare for what lies ahead for us.
He says, “First and foremost, don’t panic. Nothing is going to happen fast. Go into a learning mode. Study and understand as much as you can about the overall process. This is the way you can avoid falling prey to these hazards and take steps to protect your financial security.”
It might be a little tough for some of us, myself included, not to panic, but that’s really good advice. He also suggests the following:
1. Take an inventory of your savings and investments. Identify the places where you can rebalance strategically.
2. Reduce Your Investments in Volatile Holdings Carefully. When times are in a state of flux, you do not want to have a lot of your assets in volatile stocks, mutual funds or even high yielding bonds. Savings vehicles like money market accounts, CD’s, and short term bonds, while historically slow growing do not generally engender the same types of volatility and risk and are therefore considered more appropriate for those goals which have a life span of less than 5 years.
3. Take baby steps when buying into new assets. Keep up with your steady and continuous saving plans and investments like your 401k.
4. Get some professional assistance and advice. There are financial planning professionals whose sense of fair play trumps the mindless pursuit of a quick buck. Find and work with a fee-only financial planner who charges a simple fee for advice or management, rather than a commission or sales charge to “move money around.” For the fee-only planner the product is advice, not a specific investment. Ask how the advisor gets paid and don’t accept explanations which insinuate you are not paying them (i.e. the insurance company or mutual fund pays me…), you most certainly are paying them and the attempted illusion does not speak well for the integrity of the so-called professional.
Good to know, John. Thanks for your time.
Yes, we certainly will feel the effects of the tsunami, but as we move forward prudently, we will be able to find the means to continue to support ourselves and our families, and perhaps even find some here and there to send to the various relief effort organizations around the world.
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