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Money by the Book: Financial Worries

(Thoughts on financial concerns)

Some of your hurts you have cured,
 And the sharpest you still have survived,
 But what torments of grief you endured
 From the evil which never arrived.
 ~Ralph Waldo Emerson
 Mr. Emerson very eloquently penned a description of a very NON-eloquent emotion: worry. Worry is the prevailing theme in the current state of affairs in the economy, financial markets, and the global atmosphere in general.
 Google produces 192 million hits on the word “worry.” The definition of which is: a strong feeling of anxiety, or a lasting preoccupation with past or future bad events.
 Mark Twain quipped, “I am an old man and have known a great many troubles, but most of them never happened.”
 Rational adults know that most of the world is out of their control. However, deep down we desire to control every aspect of our lives, hence our preoccupation with financial worries.
 Worries include the slowing economy, volatile stock market and how it can affect us. Each of these can be costly to us, especially when it begins to affect our everyday lives. You probably remember when it was lunch that cost $3.75, not a gallon of gas.
 How can we live without worry in such stressful times?
 One way to get an idea of what is taking place is to look at history. Our country has seen ten recessions since World War II, the average length being ten months. Compare that to the average lengths of forty-five months for growing economies over the same period. (Source: NBER, Standard & Poor’s, JP Morgan Asset Management Group)These cycles have been intermingled for the last sixty plus years. Simply put, the economy will grow, then grow too fast, become unbalanced, then slow or shrink to correct itself.
 Our stock markets have been down before also, most recently between 2000 and 2002. Perhaps the most famous is the crash in 1929, but there have been others. The financial markets have seen ten bear markets since World War II, including this one. On average the loss is 32%; meaning that $100 invested in the market would lose $32. The average length of time that the market was down has also been fourteen months. Obviously, there is a significant correlation between the market and the economy. The flip side is that the growing markets, or the bull markets, have lasted seventy months over the same period of time. The average return has been 185%, meaning that the same $100 invested in the market would earn a return of $185. (Source: Standard & Poor’s, JP Morgan Asset Management Group)
 Individuals like you and me make up the economy and the market. We make both good decisions and bad decisions, and this leads to the different problems. While the markets move in cycles, we should not make decisions based on this information alone. Other factors, both external and personal should be included in investment and financial plans.
 Solid financial plans are designed to survive these quakes. In good times and bad, we must plan well.
 A solid financial plan is thought out well. The solid financial plan is designed to weather all events. Planning includes directing your money where it is needed most. We believe a smart strategy is to tithe and be charitable, save and invest, then pay off debt. Work towards building and using a budget. Also use the investment options that are available to you, like a 401k. Don’t be discouraged by past failures; you are where you are, so move forward.
 Once plans are made, thought out, and committed to; they are not easily shaken by the storms like the ones taking place today.
 (Thoughts on concerns in life)
 Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own. (Matthew 6: 33-34)
 Was Jesus telling us to bury our heads in the sand and not plan for the future? No, the Bible teaches that diligent plans are advantageous. We live in the world and deal with current events. However, we should react differently from the world.
 Plans and decisions should be made with eternity in mind. The scripture tells us to first focus on the Lord. If we make decisions with that in mind, we allow God to give us the wisdom to make the correct decisions.
 October 1, 2008

Investment advisory services offered through Sound Financial Strategies Group, Inc.("SFSG"), a Registered Investment Adviser.  Securities offered through Comprehensive Asset Management and Servicing, Inc., ("CAMAS") Member FINRA/SIPC.  SFSG and CAMAS are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by CAMAS. The S&P 500 is an unmanaged stock index. S&P 500 is a registered trademark of Standard & Poor’s Corporation. It is not possible to invest directly into the S&P 500 Index. Past performance is not a guarantee of future results.

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