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It’s Your Money, the Way I See It – September 2009

By Andrew Robbins

CSMS Magazine Staff Writer
Financial independence demands that you become a student of history. Take a look at your current position. Do you have employment? Do you enjoy going to work? If your answer is no, then your first investment should be in yourself. Spend money, do a makeover, educate yourself so that employers seek your skills.
      This summer I volunteered to paint my wife’s 92 year old cousin’s home. If you want to give back to the community, look within your own family, many family members need assistance. As I was painting, a thirteen year old boy in the neighborhood ventured by and we spoke about the challenges he faced, living with parents and their constant monitoring of his every decision. It was easy to see that he wanted to be out of his parents’ home and be on his own doing the things that young adults want to do. I suggested that the route he needed to follow was a path that included finishing high school and then onto university or trade school. Oh, and at a future date he would realize how smart his parents were and that constant monitoring guided him along his path. The key that opens the door to freedom is education. 
      To invest, one first must have discretionary income. For most of us, that income is provided by employment. I am a firm believer that no one cares more about your money than you do and that you are capable of first educating yourself and then investing your money. 
      Getting started, your first requirement is a discount broker. There are many to choose from and their fees range from $7 to $10 per transaction. You may purchase or sell 1 share of stock or 1 million shares for that fixed price. When opening an account many brokers do not require a cash deposit AND they offer free client training.
      The most frequently asked question is, “As a new investor what stock should I purchase?” The answer, “Invest where you spend.” Where do you purchase goods and services such as banking, clothing, insurance, utilities, etc.? The best indicator a company will be in business in the future is value received today for dollar spent. You, the customer, know better than anyone if that corporation will be around ten years from now. 
     This is a fantastic time to be an investor. The global economy has changed the playing field and the internet allows nimble investors to compete with Wall Street’s professionals.
     Let’s try and predict the future: (1) long term, home prices will continue to fall; (2) retirement accounts will be slow to recover; (3) U.S. interest rates are held artificially low; (4) in 2010 American voters will reelect Larry, Moe, and Curley; (5) cost of living allowance (COLA), no COLA reduces retiree purchasing power; (6) government stimulus and universal health increase taxes and reduce disposable income for most Americans; (7) inflation kicks in; (8) a world currency replaces the U.S. dollar and increases commodity prices; (9) the cost of food and gasoline will continue to rise; (10) the last great monopolies, federal, state, and local governments will continue to grow until they bankrupt the taxpayer.
      Creating private sector jobs is the key to our prosperity. Yet, current analysts suggest 26 million Americans will file first time unemployment claims in 2009. Ten million U.S. jobs are permanently lost. If you qualify as a first time home buyer, the $8,000 federal tax credit is an incentive you should investigate. But home buyers beware! if you overpay and you need to sell at a future date, will there be a buyer for your property? Don’t over pay! 
     If your job can be contracted out or moved off shore, than your ability to negotiate wages and benefits is reduced.
      If you turn in a clunker, expect a 1099 in the mail. Yes, the government reimbursed the auto dealership but that taxpayer money was not tax free to you.
     Investors beware! Speculating in the stock market is like a walk through a minefield. In every step there exist reward and failure. As we seek hidden treasure, the global economy provides no history. Federal Reserve Secretary Bernanke is a scholar of the Great Depression. But in 1929, the global economy did not exist. Yes, the stock market may absorb the stimulus money and do quite well in the short run. But, did Congress spray the ‘Green Shoots’ with Round-Up and will government spending lead to higher taxes and inflation? 
NoteCSMS Magazine and the author are not in the business of providing financial advice. Investors should seek professional assistance prior to making investments.
NoteAndrew Robbins is the author of It Took My Breath Away.

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