Headlines can influence your money decisions

This past week was the 68th anniversary of D-Day. On June 6, 1944, more than 150,000 Allied troops invaded the beaches of Normandy. Not only do I ask for your appreciation of those men who risked and lost their lives fighting for our freedom, but for your perspective on how large world events like this relate to world economics.

Today, the headlines about Europe are just as prolific. But they are dominated by the possible collapse of the European financial and banking system, the possible financial failure of a few governments and issues of currency devaluation.
Rarely in history has our world been without some shocking news or catastrophic event. We’ve had high inflation, we’ve had low inflation. We’ve lived in peacetime and in times of horrific wars. Our reality dictates that we are likely to always have interference or headwinds that give us the feeling that the financial system will suffer.

Doing nothing, however, is still about the worst thing that you can do.

Today, record amounts of cash sit invested at rates below the current rate of inflation. Many understand that this loss of purchasing power can only get worse over time, and the wisdom is often grounded in the fact that the certainty of a small loss feels better than the uncertainty of a possible large loss. For some, though, the loss of power can lead to problems down the road.
If you find yourself stuck in this quandary, get a fresh set of eyes.
Perhaps a fresh set of eyes can show you what your future would look like were your cost of living to grow at 3 to 4 percent while your assets on an after-tax basis grow at less than 1 percent. Small numbers indeed, but these small numbers may have a profound impact on your ability to maintain your lifestyle over your entire lifetime.

I’m not suggesting that you get out of your comfort zone in terms of how you have your nest egg positioned and invest in risky or volatile holdings. But I am suggesting that you understand that throughout history there have been major world events that affect our lives and finances.
I do not know what the headlines will be over the next seven days, but there are likely to be headlines that can affect your investment decisions. Before you head for a bunker, understand your alternatives and attempt to do something positive.

John P. Napolitano is CEO of U.S. Wealth Management in Braintree, Mass., and 2012 president of the Financial Planning Association of Massachusetts. He may be reached at jnap@uswealthcompanies.com or on Facebook as JohnPNapolitano and US Wealth

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