Once upon a time, not to long ago, investing for the future was much simpler and a lot less risky than it is today.
With so much upheaval in the economy, it has become prudent to find safer ways to invest your hard earned money. Your goals for retirement may have to be revised to compensate for losses suffered during the current recession and above all, you have to find ways to spend less and save more.
Many people are fearful of what is to come since so much is being made of the fact that Social Security may go bankrupt in the foreseeable future. These are scary times so creative investing has become the norm for many of those who have preconceived ideas of the lifestyle they want to live when they retire.
Things are very much different in the world of finance than they were just a few years ago. In years past, investing for retirement was as simple as buying a home, opening a savings account, investing a little in stocks and bonds, opening a 401k account at work, and purchasing Certificates of Deposit (CDs).
Those were the good ole days of slow but steady growth. Your investment dollars were considered safe and secure and your retirement income was rock solid.
Back then, a home with a thirty year mortgage was the norm and most people worked hard to pay it off. Once it was paid off, you could live virtually free for the rest of your life, except of course, property taxes and homeowners insurance payments still had to be paid.
You worked a job until you retired, believed in putting your money in a bank and saving it, and you lived within your means. With retirement income from your job, a monthly social security check, and your savings, you could depend on living out the rest of your life financially secure, just as you, and generations before you, envisioned.
But then things quickly changed. Along came the fast paced ways of modern doers and shakers. All caution was thrown to the wind. Somehow, the idea sprouted in somebody's mind that the old ways of doing things were not good enough anymore and we all fell for it.
High volume and creative investing became the way to play the investment game. You had to invest like the big boys or get left behind. Everything was a gamble and if you took the risks and gambled big, you were sure to win. Or at least that's what we were told.
We were sold on the notion that we had to think about our retirement differently and change investment strategies so they could reflect a more up to date way of doing things to keep abreast of what was going on in the world of finance.
To be sure, a lot of wealth was created and some people made noticeable financial gains. But for many, an atmosphere of over indulgence set in and it didn't take long before we were all carrying more debt than we should have been. We lost sight of the fact that it was all a gamble. And once we started gambling with our retirement, we put ourselves in precarious situations.
Many people borrowed heavily on the equity in their homes, drew down the money in their 401ks and used the money to invest in the stock market and other things. Home values were overly inflated and many buyers were sold on the idea that they could make a quick profit because the values would continue to increase. They knew better, but the lure of fast, easy money was to much for them to resist.
People spent their money as fast as they could make it and for a while, the good times rolled. But just like that, the economy went into a deep recession. Much of the gains disappeared almost overnight. The real estate market soured, the stock market went bust, and many people lost much more than they could afford to lose.
How this could happen on such a large scale is anybody's guess but we should all acknowledge that whether we lost or not, we gambled with our future and now we know it was not the right thing to do.
Now is the time to put this episode behind us and start rebuilding. It is going to be tough, but with a sense of purpose, determination and perseverance, you can regain the upper hand and retake control of your financial well being.
You may have to revisit the way your parents and grandparents handled their business. The old school way of financial planning may seem outdated and cumbersome, but it worked then and it can work now.