Clouds Ahead: Get Ready for Some Tough Love

Personal Money Planning |

By Gary Silverman, CFP®

As I’m writing this, the debt crisis has been averted. No, that’s not right. We went through a crisis…we just escaped the worst aspects of it. And even with that, all we have done is delay it. How the stock and bond markets reacted, you already know. Since I do not have the gift of prophecy, I cannot comment on their future in this column…and I might not have wanted to anyway.

Many believe we are in the midst of a hard time. I’d agree, but it is not the first time we’ve experienced a hard time. People my age (I was born in 1957) grew up with parents talking about the Great Depression and WWII. It’s likely most people reading this remember vividly the Financial Crisis that started 15 years ago. I witnessed a couple weeks ago the unveiling of a monument to Gold Star Families—those who have lost someone to war. Bad things happen. Sometimes it’s our own fault, but often we are just swept along by a tsunami which we had no making of.

Currently, we have made it through the worst of the COVID crisis, are living with a hot war in Ukraine, are becoming anxious about China, and are dealing with prices rising faster than wages. Yet those are not the problems I worry about. They are known and I can’t do anything about them. But identifying these issues and the myriad of others we may or may not face allows you to plan and adjust, hopefully making their effects less severe.

Think of each problem as a large fish. I’m hoping to take that fish and smack you upside your head until you acknowledge there is a problem. Not content with just getting you upset, I will then suggest solutions that rub salt in wounds.

The economic forces facing your family and the entire country are huge. Most are not new. Human nature will likely drive us to make the problems worse rather than better, getting us into more trouble than we’re already in. Hence the smack upside your head—I want you to at least know the fish is there. If you want to ignore it after that, it’s your prerogative.

With that said, I’m the type who doesn’t get depressed thinking about what can go wrong. I know it might not happen, might not be as bad as I thought, and at least in thinking about it, I might be able to come up with ways to escape or mitigate the damage. I’m not sure if that makes me an optimistic pessimist or a pessimistic optimist.

So come back next week. We’ll start by looking at the stock market and where it will be in the next decade and what you should do about it now.