Sunday, May 15, 2016

An Economic Paradigm Shift in Investing














              
By Willie T. Butler

Time to Evaluate Your Economic Outlook

There are three economic trends in America that have begun to shift dramatically into less favorable territory.  They are better known through the personal goals of buying a home, securing education funding for college and investing for retirement.   For the past 45 years these three areas of financial planning provided relatively safe saving and investment options while allowing us to apply standard planning practices that were based on long-term investing trends. 

Since the recent economic recession of 2008 – 2013, the financial markets and consumer behavior have dramatically shifted away from a more predictable, relatively stable investment environment to inducing a more uncertain and less confident approach to investing. 

And why not?  Anyone who suffered financial losses in the appraised and resale value of their home along with reductions to their IRA, 401(k) or other pension plans have legitimate reason to be skeptical about dipping their feet in the water again.  Staying out of the stock market or, at the very least, shifting their investments to more secure but lower-yielding products such as capital preservation mutual funds, or even money-market mutual funds, meant earning almost nothing as a consequence of their flight to safety.

Now add to these the increased debt-load that parents and their children have incurred using federally guaranteed student loans offering 10-year repayment terms at interest rates between 5.5% - 7.5% on average.  Recent government and watchdog group statistics tell us that student loan debt is currently in excess of $1 trillion, or about .5% of GDP.  And that is just the amount that has been borrowed from the federal government. 

The Impact of Long-term Debt Can Be Devastating

Many students today must also pursue financial aid through their school, grant and scholarship funding programs or, in the alternative, commercial lenders or from family and friends, to meet the high cost of education.  It is the reason Senator Elizabeth Warren (D.MA) and many other elected officials are lobbying to reduce, even forgive, some percentage of the student loan debt owed the federal government. 

In lieu of these facts, Americans must rethink their current goals and the impact they might have on their future.   Is saving to own your own home versus choosing to rent and invest the difference—assuming a mortgage payment will be higher than rent—still a viable American dream?   And, if someone wants to become a computer programmer or cybersecurity specialist, is pursuing a four-year college degree the best education option when two-year certification programs produce graduates  that land good paying jobs with less education debt?   And, how realistic is it to plan your retirement around attaining a specific age, such as 62, 65 or 70 when you do not have the economic means to truly retire and continue your current standard of life?

 Answer.  There is no one-size-fits-all strategy or advice that anyone can offer you.  Each individual and their circumstances are unique and require highly personal and thoroughly customized life planning.  Here in the 21st century, there are great automated tools, such as robo-advisers and software applications like Mint, which are designed to help you plan your future.  But that is only partly true. 

Man Plans His Goals, But God Directs His Path

Life requires regular and specific choices be made at various intervals along life’s highway.  And for that there is no one better to help you navigate your course in life than the Lord Himself, which too means the Spirit of the Lord, or, on a practical basis, someone who truly represents His Kingdom’s perspective.   Jesus said it best when He said we are to “Seek ye first the Kingdom of God and His righteousness, and all other things will be added unto you.”  (Matthew 6:33)  This implies that we can be properly guided through our life’s journey if we choose to seek God and live according to His will for us.

I named my company the Life Planning Institute, Inc. because financial planning is merely a sub-part of life planning.  It is good to understand and apply financial principles to one’s saving, investing and spending strategy.  But it is even more significant to first discover who you are in Christ, what special and unique endowment He has given to you for Kingdom service in the earth,  and how that correlates into your career and personal living goals and objectives.  Someone desiring and gifted to teach, for example, will most likely not earn what a medical doctor or engineer might earn over the course of their career.  So it would not make any sense to plan to live the lifestyle of someone who will likely earn 3-4 times more than you as a professional. 

Let Us Help You!


There are companies like the Life Planning Institute that have your best interest at heart.  In Part Two of this article I will share the various services and educational approach we provide for those seeking to live their lives for Christ, but needing to understand how to live it in a material-oriented world.  In the interim, please visit our website at www.MyLPI.org and our blog at http://blog.mylpi.org.


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