TODAY’S FINANCIAL GAMEBOARD
In the time from 2008 to the present, the slow and shallow economic recovery has shaken the very foundation of many people’s financial base — job security. With high unemployment, many people have lost their primary source of income and, as a result, have depleted their savings and retirement accounts in order to make ends meet. In addition, many people have lost substantial amounts of equity in their homes, due to lower home prices or defaults on mortgage payments.
With major financial setbacks caused by decreased income, a lot of people find themselves without enough time to put away money in order to rebuild their wealth for retirement.
In addition, there are those who have lost additional capital through poor real estate deals, unwise stock market decisions, excessive personal consumption, and disastrous business ventures.
In order to take the safe and sure road to wealth through compound interest, a person needs a steady flow of income over a long period of time. So for those people who have to start over at age 40, 45, 55, or 60, there just isn’t enough time to build their wealth gradually by traditional methods.
To make matters worse, consistent high rates of return at low risk are no longer available. Some of the challenges in the current economic environment include: (1) loans for real estate and small businesses are hard to qualify for, (2) a vast majority of stocks have gained little over the last decade, (3) bonds have very little room to move to the upside, and (4) most bank savings accounts and money market funds are paying close to 1%.
So investors are facing the triple whammy of an unstable income, a shortage of time, and low rates of return. This makes it nearly impossible for many people today to come out ahead in personal finance without taking on increasing amounts of risk.
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“Money is power, freedom, a cushion, the root of all evil, the sum of blessings.”
Carl Sandburg