blog post 4/9/2016

The Disclaimers You Do Not Read or Hear

When it comes to investing, it seems like every time you consider a potential vehicle to help build your wealth there is some type of disclaimer. These disclaimers should most certainly be there. Investors should enter into any opportunity understanding what the downsides are. Along with the potential for gain comes the risk of loss.

When it comes to putting our hard earned money in the bank, though it might be FDIC insured to a certain amount (I recommend checking all your bank accounts to verify exactly what that coverage is) there is no bank account protection that I know of on the buying power of that money.

If inflation ramps up, your money in the bank might begin to lose value. This value may not necessarily be replenished by anemic interest rates. Consequently, an appropriate disclaimer might be: Warning! The money you have in a bank account might be insured but its buying power is not. Even though that is true, it is wise to keep some share of your wealth in cash and cash equivalent accounts, such as bank accounts and money markets. Working with a qualified advisor might help you determine what the appropriate amount is.

Let’s consider another disclaimer that might make sense. In our consumer oriented, highly marketed to economy, do we ever see the disclaimer warning us that if we buy a whole bunch of unneeded goods and services that we will have less money to invest.

Sure, nobody, and I mean nobody, wants to put their money into an investment that does not yield some reasonable return, whatever that may be. However, an underperforming investment probably works out better than wasting money on all kinds of consumer goods that we end up leaving in the closet, attic, basement or garage.

Have you moved recently? Do you know anyone who has? Often, people in the midst of moving voice a complaint that sounds something like, “I don’t know where all this junk came from.” The upshot of this revelation is that most of us could probably save more money, by simply cutting out the junk we accumulate and do not use.

So here is another disclaimer you might not have heard before: Warning! Rampant and unwarranted consumerism can deprive us of maximizing our investment potential. Maximized investment potential begins with having money to invest in the first place.

Action is the order of the day. Perhaps, you might want to look around your home and see how many things you have bought that you really do not need. If you are anything like me, not only is the clutter something you could do without, but those unused or lightly used things bring you no happiness. Wouldn’t that money have been better off invested?

Think about it. Then, take reasonable action.

Scott McGimpsey April 9th, 2016

This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC