What Are You Hiding From?
Why does an ostrich bury its head in the sand? Is it looking for a mid-day snack or is it trying to avoid reality?
Many of us don’t like to open financial statements. You don’t want to be disappointed, especially when the market is down. Frankly, I am not sure which is worse: disappointment or failure.
We can’t make our problems go away by simply ignoring our issues.
It’s okay to be disappointed once in a while. When your health is in jeopardy, you don’t sweep it under the rug or bury it in the sand. A majority of the time, things don’t get better on their own. We all know someone who ignored their health problems for years, if not decades. It can be fatal to your friend who is sick and have a huge impact on their entire family.
For some reason burying our heads in the sand can makes us feel better for a time. But the harsh reality is for those who turn their head away from danger and take no precautions.
The last 12 months have been volatile, mostly on the downside. Watching your assets decline is not pleasant. During these times most people are looking for safety, which begs the question: what is safe?
- Cash in the bank – inflation eats away at it, lowering your purchasing power in the process.
- Real Estate – rising rates will eventually force reductions in equity.
- Fixed Income – rising rates are forcing down prices of bonds.
- Equities – are subject to all of the above.
- Annuities – guarantees are not always what you think they are and can cost large penalties.
So, is there such a thing as safety?
There are a few things prudent investors should consider to avoid failure in retirement:
- Quality is golden.
- Cash flow is king.
- Debt is slavery.
When evaluating investments consider a few things: if a company has quality earnings and sustainability, does it have a healthy balance sheet and ability to weather the storm? The more debt a corporation has, the more it’s subject to other risks which will impact earnings. Finally, cash flow provides the ability to have the freedom to invest and grow in the future.
I try to remind folks: it is not about how much you make; it’s about how much you keep.
I encourage you to open your statements, review them, and talk to your advisors. They work for you, and you have the right to ask questions to keep them accountable.
You can bury your head in the sand, or you can open up your statements and give us a call.
We’re here to answer your questions.