Last week I read an article that looked at some of the financial issues that families faced 50 years ago and compared it to today. Obviously, there is a major difference in the issues we face today than we did 50 years ago. I thought I would give you my spin of some of the major differences and challenges we face today versus 50 years ago.
One of the major challenges that we face today that we didn’t have 50 years ago is the explosion of information. Fifty years ago the average American got their information from the newspaper along with TV and radio. Any research on a subject would be done at the library. Fast forward to today, Americans are flooded with information, not only from newspapers, TV and radio, but also from the internet and social media. At our fingertips we have access to an incredible amount of information. Unfortunately, the wealth of information that we have at our fingertips doesn’t mean it’s all good information, because today we have to deal with an incredible amount of misinformation and disinformation. Even though in today’s world we are flooded with information, it is becoming more and more difficult to find truly independent, factual information. I’ve always said to be successful in the financial world you must rely on independent information.
Another change that has had a dramatic effect on families over the last 50 years has been the availability of credit. If you go back 50 years ago, credit cards were brand new and obtaining credit was not easy. Fast forward to today, charge cards and other forms of debt are readily available. In fact, with the explosion of the internet you no longer even have to talk to a person to get approved for credit.
Because credit is so readily available, it has led to severe financial problems for American families. It is essential to financial security that you always think twice before incurring debt and that you are constantly monitoring your debt situation. One sure way to strangle your finances is to be overly burdened by debt. Just because you can borrow money doesn’t mean that you should.
Fifty years ago we lived in an American economy. Companies like Ford, General Motors and McDonalds depended on the U.S. economy for their income and we’re just dipping their toes in foreign markets. Today, numerous American companies depend upon foreign markets in order to remain in business. The international economy that we now live in has affected many things in our society including our jobs and how we invest. Fifty years ago it wasn’t important for people to diversify their portfolio internationally; today it is essential. In fact, today no longer can you just have one international investment, you need a variety of them to totally diversify and protect your portfolio.
International investing has its own set of challenges that investors must deal with. Foreign markets and economies are different than ours and sometimes operate on different cycles. That being said investors cannot afford to ignore foreign investments. If they do its sort of like playing football without a helmet –it just does not make sense.
There’s no doubt that much has changed over the last 50 years when it comes to personal finance. However, one thing that has not changed and that is our responsibility to take care of our own personal finances. Yes, there are more challenges and speedbumps in the road today, however, the bottom line is no matter what the challenges are, it is still our responsibility to take care of our personal finances.
If you would like Rick to respond to your questions, please email him at Rick@bloomassetmanagement.com.