http://www.blochure.com/hypo-venture-capital-switzerland-seizing-opportunities-in-tough-economic-times-2529/Here at Hypo Venture Capital Zurich we are committed to offering our clients access to the latest and broadest range of financial services and products on the market. We know that choosing the right strategy, the right investment and the right product is no easy task in this day and age! Whether its advice, investments or financial planning we are here to answer all your questions and facilitate all your financial needs.
Many of us have concerns about staying on track in these uncertain economic times. Mounting layoffs, plunging home values and declining stock prices all have a way of generating fear and uncertainty.
"Even though things look bad sometimes, you need to remain focused on opportunities," says Andrew Bradley, HVC’s chief investment officer. "We like to say there's opportunity in every market."
Today's investors face unprecedented challenges
2009 got off to a rough start, with the economy and financial markets still reeling from last year's credit market meltdown and resulting financial crisis. The markets traded down in a painful, correlated fashion, while economic activity plunged.
But since the end of the first quarter, signs of improvement have emerged. The equity market has enjoyed a meaningful rally since mid-March, led by the financial and consumer discretionary sectors. There is still have a long way to go before things get considerably better and before the economic picture brightens considerably but overall the worst may be behind us.
The housing market remains a major thorn in the side of economic growth. Part of the problem is too much supply relative to demand. We are starting to see housing prices fall to the point where buyers are attracted into the market and transactions are occurring.
These imbalances go beyond housing to a worldwide perspective. For example, the United States consumes too much and saves too little, whereas developed and emerging Asian countries save too much and consume too little. We should see the impact of these imbalances play out in the coming months, as countries around the world tackle the mounting challenges.
A return to growth is on the horizon
We believe economic growth may resume in the fourth quarter of 2009. That doesn't necessarily mean things are going to rocket up in the markets, but it means we're setting the stage for better times ahead.
The federal government's stimulus package along with the Federal Reserve’s extraordinary expansion of its balance sheet will begin to show results.
Although the amount of federal stimulus is record-breaking, it's been necessary to combat the significant deflationary pressures triggered by the financial crisis. Once deflation takes hold, it's extremely difficult to counteract. In an environment in which consumers and businesses expect prices to fall, they begin to defer consumption, believing they will be able to make their purchases at a cheaper price down the road. Therefore, the government is doing everything it can to ward off deflation, even as it risks promoting inflation.
Opportunity is within your reach
As troubling as recent market events have been, it's important not to get consumed by the daily ups and downs. Instead, focus on factors that promote long-term financial success.
These factors are most evident when examining the philosophy and practices of those who have achieved financial comfort — people who possess the ability to tackle any tough financial situation and the insight to capitalize on opportunity. Author and TV commentator Jean Chatzky calls this phenomenon "the difference." "Whatever the economy, these are the people who have the skills and attributes necessary to move into lasting financial comfort and wealth."
What makes a financial difference
Recent research on American attitudes toward money and personal finances found that financially successful people exhibit several common factors, including happiness/optimism, resilience, connectedness and habitual saving.
These are the people who know the difference.
How you can stay on track
Based on the characteristics and experiences of financially successful Americans, there are several actions and strategies to help people stay on track, focus on saving and protect loved ones during good and bad economic times.
People who have goals for the short, medium and long term, research has shown, actually achieved their goals more often than people who don't plan. "Why? Because when you’re running a race, it helps to know where you're going.
Consider rebalancing your portfolio
As far as investment strategies go, in today's environment, consider rebalancing your portfolio with an emphasis on the bond market. The bond market — particularly investment-grade bonds and high-yield credit — is very attractive versus its historical pricing.
Build savings and cash reserves
As for savings, if you have a job and a steady income stream right now, you need to be saving, because you don't know when the tide may turn. For women, saving is even more important. A woman still earns on average only 80 cents for every dollar that a man earns, and they possibly take breaks from the workforce to care for children and older parents, which means that when they get to retirement, their account balances are substantially smaller. Plus, women generally need their retirement accounts to last longer because they live an average of seven years longer than men.
Building cash reserves is essential, too. In 'normal' times, you should have about six months of emergency expenses set aside in cash, given times are more difficult, and especially if you're two to three years away from retirement, we think you should have up to two years of expenses set aside in cash.
Have a solid protection plan
Protection planning doesn't end with cash reserves. It's also critical to have a will naming guardians for minor children, a health care proxy (someone to make your health care decisions if you are unable), a living will and a durable power of attorney for finances.
Everyone should also have life insurance — especially those who have dependents — as well as disability income insurance, homeowners or renters insurance, and personal liability insurance. Why? So that a disaster, a big one or a small one, can't come along and take everything you've built away from you.
It's also important to protect against taxation, with strategies designed to generate tax advantages for your financial future.
Avoid common investment mistakes
Staying on track also means avoiding some common investment mistakes. For example, it's critical to not focus on one or two investments, but to stay diversified instead. And people should also resist the urge to raid a retirement account when changing jobs because the tax implications could be significant, potentially derailing a long-term strategy.
Another common mistake, is attempting to time the markets. People don't know how to time markets. Professional investors have a hard time timing markets, so you can't possibly succeed by trying to figure out the right time to get into the market and the right time to get out. It's highly likely you’re going to miss a significant day in the market. And, as we all know, if you miss the 50 best trading days over a multiple-year period, you cut your returns by as much as one-third. Instead, we suggests implementing a dollar-cost-averaging strategy to remain committed to the market and maintain a long-term investment plan.
Work with a financial advisor
Finally, we cannot stress the importance of getting help. Not only do people who work with advisors reach their goals more often than those who do not, but having one in your circle provides the direction, help, motivation and support that we can all use at times like this.
The markets will continue to be extraordinarily volatile, offering you opportunities to get into the market or monetize trades work with your financial advisor to identify the opportunities most appropriate for you and your portfolio.
Make a difference in your financial situation
Whether the economy is roaring or retreating, you can prosper once you understand the characteristics of financially secure people and implement a series of commonsense strategies. Talk to your HVC financial advisor today about how you can build lasting financial comfort and wealth.
