Market Watch: June 2, 2009

Biblically based financial planning is the perfect way for you to keep control of your budget and finances, while keeping in line with God’s perfect plan for your life. By planning your financial future according to God’s wishes for you, you can live a much more stress free life. Biblically based financial planning can help you master the skills needed to plan your finances appropriately. They will show you the proper way to plan and use your money to better yourself instead of bringing you into financial ruins. The more you know, the better off you’ll be. The Bible is very clear on how we should manage our finances, we simply need to apply the set rules.

We’re going to be talking about personal financial planning in future articles so let’s start now. Develop a plan to get rid of your bad debt as quickly as you can. Now, don’t go get a second mortgage on your house just to pay down your credit cards but do figure out a way to pay those cards off ASAP.

It’s been clear to me over the years. Clients with diversified mutual fund and ETF portfolios have enjoyed a greater quality of life (specifically due to their investment experience). They sleep better at night, they don’t have as much stress and they generally have a greater focus on enjoying life than trying to beat the market! There’s nothing quite like not worrying about APPLE’s next earnings report, government regulations on the health care industry or shifts in consumer behavior.

PHYSICAL – These can be by a mugger, an abuser, a violater or (believe it or not) from over-violent children. It can arise from complete strangers to people who are close to you.

Sharpe Ratio – This is calculated by subtracting the risk-free rate of return (US Treasury bond) from the rate of return of an investment and then dividing the result by the investment’s standard deviation. It’s seeking to mix a lot of these things together and tell investors whether or not an investment’s returns are due to smart asset management or due to excessive risk. Case in point, if everything is going well in the capital markets then usually the riskier investments do better than the less risky investments, so how do you compare these two? This is what the Sharpe Ratio seeks to do, and the higher the better for this number.

I dropped my pencil, an unnerved woman. It’s not that I want to be a multimillionaire, though like everyone else, I do. I’ll settle for comfortable – very comfortable. I enjoy living in a nice home, owing a yacht (our floating cottage), driving nice vehicles and contributing annually to an RESP and RRSP for my daughter and myself, respectively. However also recognized that I would probably be one of financial planning services the millions of people who would be forced to work into their s. I wanted the ability to have all of those luxuries, but not compromise my thoughts of an early retirement. I think these are goals that are shared by most North Americans. Are they realistic? Can they be realized on an average salary? If so, how?

But the risk that most investors ignore is inflation. This is the risk (pretty much a sure thing) that the purchasing power of a dollar goes down. For example, over 25 years (the length of retirement for many people) an inflation rate of 3% will rob over half of the purchasing power of every dollar you have. Trying to avoid principle risk and volatility risk by sticking with CDs or other guaranteed income accounts makes it hard, if not impossible, for your investments to grow faster than inflation.

Don’t forget a privacy statement: some of your readers are going to be worried you’ll take their information and either use it to spam them, or use it to steal their identities. Naturally as an accounting professional you would never betray a trust like this but a lot of people are going to be suspicious of your motives so include a privacy statement. Make it clear you won’t use their contact information to sell them trash they don’t want or, even worse, distribute their emails to anyone. Regrettably your professionalism can’t be presumed and a privacy policy will help establish it. loads of of your visitors don’t know you yet and will very likely assume the worst.

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