Making Difficult Financial Decisions


How am I preparing for the next financial smackdown?


By Jim Baron-


As a baby boomer, it’s safe to say retirement is a significant part of your thoughts. And you can’t talk and think about retirement without talking about your finances.


There has not been anything easy about Covid-19. I will not begin to list the many ways it has impacted nearly every one on planet earth. Some in very serious ways. 


How can you save for a life time, and sock money away in IRA’s, with the full expectation that you will have enough to live on until the day you depart this life while enjoying a standard of living comparable to your pre-retirement days, only to have it diminished by thirty- percent give or take. Of course, in a way that is difficult to understand, the stock market has bounced back to an unbelievable level given the likelihood of ongoing economic challenges for our country.


If we didn’t know it before, we should know now that even with all the resources we have on the internet there are a couple of economic factors that can not be determined. One of the significant ones on most of our minds today is the rate of return over the long haul. We know from first hand experience that past returns on investments are no predictor of future returns.


Who of us now is confident that this apparent bull will continue to run wild on wall street? A list of the headlines I wrote last week gives us the idea that there is no agreement among the financial gurus as to the future of our nest eggs. Will the increases we have seen in the last two month continue? Or will there be another major correction? What impact will the upcoming election have on the economy? These are serious questions! And how you answer them and respond may very well affect your short term financial future.


Since the future is not clear, this can create a very uneasy feeling, especially for those that are dependent on the returns from their investment. And sometimes its easiest just to bury our heads in the sand with a somewhat fatalistic attitude believing there is nothing you can do to effect it. And that is the wrong answer.


You do have options.


For example, if you have chunk of your assets in a bank account or some other form of cash right now, whether you recognize it or not, you have made a decision to not invest it in the market. Or if you have all your money invested in Vanguard, the Money Market or other stocks and bonds, you have made a decision to not put your money in cash. Those are options you have. You may have made a decision to have your investments handled by an individual adviser or a company or you may invest directly in the stock market yourself. There are lots of options. 


It is very important, especially in times like we are dealing with right now that you are an active participant in your financial future. That can mean different things to different people, but one thing it means for all of us is that we must become informed. And with the resources we all have at our finger tips today, there is not a good excuse for not becoming informed.


Because I have a portion of my retirement fund invested in the stock market, and because I personally believe that the market may be headed for another significant correction in the not too distant future, I have been asking myself the question of what I can do to blunt the potential downturn, short of taking it out of the market and putting it in cash. After the pandemic took a slice out of my investments, I thought it would be nice to be able to buy insurance that would protect my investment from a negative events impact on my finances in the future. The good news is, you can. It’s called hedging. OK, it’s not really insurance but accomplishes the same purpose.


So this is a good place to start. If you don’t have insurance, a hedge on your investment, this is a good time to become knowledgeable and informed about this financial tool. A google search will give you a list of 180,000,000 resources. If you only want one, (and no, it is not a sales pitch) I suggest starting here: https://www.investopedia.com/trading/hedging-beginners-guide/


Happy Investing!

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