In a recent blog entry of mine, “The Courage to Rebalance”  I mention the importance of rebalancing, and that one of the benefits is that the reduced volatility creates greater growth over a long period time. I want to elaborate on this point more, because it is critical to establishing financial security. 

I realize that for most of us taxes is a pretty boring topic, but a couple of distinctions here and there and you can save thousands over your lifetime and probably hundreds of thousands if you are a saver and educated investor.   It’s always amazed me as a Financial Planner how often people never make the link between their taxes and their investing portfolio.   Many people feel that investing is one thing and taxes are another and fail to plan properly. The real beauty is that most tax strategies are generally risk free and it’s like free money as opposed to investment strategies where we have to manage risk. 

Before trading in this market for the first time, these “Top 10” things come to mind that I’d like to share with you before you get started. Even if you just started trading forex, take these to heart and I think you will improve your chances of success considerably even if only 2-3 of these ring a bell with you.

So let’s get started…

2008 brought about mixed emotions. On one hand we had cheaper gasoline than we’ve seen in many, many years (the good). Then we had the economy sliding off the cliff (the bad) and finally the unemployment rate shooting through the roof (the ugly). Ouch!

So everyone was glad to see gas go down from $4 a gallon to a buck and change…however, everyone knows someone out of work now and that’s very scary!

Oil futures are predicting $60 oil by next December. I think it will at least hit that and could head even higher by then.

Some of the stimulus that the government has given to the economy will have an effect soon. However, economies are like slowly turning ships and not like speed boats. Therefore this will be a process and not as quickly as we all would like. But…it will turn the economy around.

There are a lot of people out there that purchased homes at very elevated prices at the peak and near peak of the real estate bubble and are now walking away from these homes simply because the values have dropped so much.  It is one thing to foreclose when, you have lost your job or suffer a severe financial hardship beyond your control, but I think walking away just because the value dropped is a big mistake! 

Recently, there has been a huge bubble forming in what people “feel” is always a “safe” financial instrument….treasuries!

And much of the time they are right. However, any financial instrument can get ahead of itself and form a bubble as “everyone gets the same idea at the same time”. Well, that is what has happened in bonds as money got scared and ran for the hills.

The 30 Year Treasury Bond Goes Parabolic! 

Those hills ended up being U.S. Treasuries, the U.S. dollar and the Japanese yen. In the past, I’ve covered the inflows into these and where some of the outflows will go.

I am serious, this is an incredible exercise! Stock pickers and investors will not buy stocks that do not control their spending, have a lot of debt and fail to plan properly. When I was a Financial Planner, I would often have clients that made a lot of money, but they where a mess with their finances. They wasted a lot of money on fancy cars, expensive vacations and homes that were much bigger than what they needed. There is absolutely nothing wrong with expensive material things, but only if you can truly afford them!

Freddie Mac has stated that the 30 year mortgage is at record lows and fell to its lowest rate in 37 years. The rate has dropped to 5.19% from 6.14% a year ago.  According to bankrate.com, the average monthly rate is at 5.28%, and the record low for their 10 year index was 4.88%.  What is even more interesting is that the averages may not be telling the full story.   Some lenders are still a little frozen while others are ready to lend. There appears to be rates as low as 4.25% out there.   

During 2008, one of the few financial instruments in the world that went up was the U.S. dollar. It became a great defensive play as investors ran back to the “world’s reserve currency”. Also, investors began to flee the emerging markets and repatriated their funds back into the U.S. which caused them to sell out of the foreign currencies and repurchase dollars.

Also, as stocks and commodities plummeted throughout the latter part of 2008, investors looked for any “beaten down” safe havens out there that they could run to. The dollar had been sold off for years back to back. So there were very few financial instruments beaten down like this one. (However, the Japanese yen was in the same shape also).

So for a combination of all of these reasons, the dollar was “propped up” during 2008.

Happy New Year from MyWealth.com!!!   2008 was a difficult year for most people, but 2009 is a brand new year and although things will probably still be rough, you can ease your pain by knowing your financial future will be different.   Building wealth and financial security is a lot easier than you think and all you need is a little more education and direction.