Thursday, January 15, 2009

Act now for family financial success

Investment fear is everywhere. There’s no question that we’ve lived through some pretty awful investment times. These past ten years have been as volatile and depressing as any on record. Families are still frightened, with plenty of good reason.

The stock market can be a frightening place. Peter Lynch often points out that the stock market – on average – has a twenty-five percent setback every five years. That magnitude, alone, is enough to keep many people investing solely in bank certificates. And the 2000-2002 Bear Market was recorded as one of the worst ever. Then, when things seemed all better again, along came 2008 to remind us again about harrowing markets. We’ve lived through both recent Bears (so far), but it is no wonder that some people are terrified.

Perhaps the worst manifestation of fear is paralysis. This is the “deer in the headlights” syndrome that is so well-documented in nature (in fact, using bright lights to hunt is so predictably easy that it’s illegal). Sometimes, like with wild deer, things just seem so frightening to us that we choose not to do anything. Paralyzed by our own fear, we can become statue-like spectators to our own destruction.

Now is the time to take positive action. True, restructuring a portfolio now might involve acknowledging some earlier mistakes. It might require changing how you do business or how you research investment decisions. It may mean that it’s time to dump a broker or other adviser who contributed to those disasters. These aren’t easy decisions, but they are necessary considerations for future success.

For families, now is a perfect time for review. What worked? What didn’t? How are you progressing towards family goals? Emergency reserves. College savings. Retirement investments. A genuine review should offer new insight into the necessary steps for success.

Now is a unique point of investment opportunity. Let an old proverb work for you. Shifting “all your eggs out of one basket” works even better when you can buy both eggs and baskets at bargain prices! Almost every investment sector is down right now and this could be a terrific time, maybe the best in our lifetimes, to build a superbly diversified portfolio.

Now is the perfect time to hook up with a quality investment advisor. Marginal professionals have already left the investment business, and others will soon join them. The truth is that easy investment times attract lots of friendly faces. Tougher times require professional diligence, skill, persistence, and – above all – a genuine desire to help clients. Good people survive, and now’s a great time to find one.

Above all else, remember this: Unlike the deer, we have the power to learn from our mistakes. Many mistakes are correctable, but to correct them, we must act. The sooner the better. Now is the perfect time to get started.


  1. You are so right - having candid family conversations is more important than ever. Glad to see you blogging on personal finance. Check out this blog from another advisor I respect who's trying to help parents and teachers educate younger kids about money matters: Keep up the good work, Dan!


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