By Alan Singer, Senior Financial Advisor and Pension Investment Strategist at Global Wealth Management in West Des Moines, Iowa.
What’s in store for your finances for the next ten years? Most of us are in an upward career cycle for the rest of our lives, which means we are using a portion of our income to pay off debt. This is a good thing because it protects us against inflation and gives us a measure of security when it comes to our retirement (or even job security).
The takeaway is that many of us are in for a tough slog during the coming decade, as interest rates on our credit cards are approaching historic lows.
That’s why financial advisors are telling clients to use income-producing investments, especially as long as their rate of return is higher than their payments on a credit card. That advice is in line with federal regulations that were passed after the financial crisis in 2010.
We are currently in an unusually good year for overall economic growth. As such, investors need to take a more global view of what they need to do. What are some of the emerging opportunities for some of us in the coming decade?
1. There are low cost global investment vehicles that require far less management and administrative fees than if you invested in individual stocks and bonds. Generally, those fund managers will keep much more of their assets under management, hence paying much less in fees.
2. As the United States faces further pressure to enact a carbon tax, it’s encouraging to learn that renewable energy is also becoming much cheaper in many parts of the world. The United States will look increasingly distant and less in tune with the rest of the world as the “sun” sets on the US economy’s ability to go it alone.
3. The artificial intelligence revolution has yet to reach its full potential. Though it doesn’t have to, U.S. policy makers must pass legislation to promote AI. Even if AI might take over for or just supplement human expertise in some future workplace, it would be a step towards a more inclusive and resilient global society.
4. True globalization is very much a thing of the past. In fact, it didn’t occur at all in the coming decade, largely because of U.S. protectionism and energy policies. If you are not sure, explore what global leadership means to help reduce the cost of goods worldwide, upgrade our infrastructure, or develop the Middle East and China in strategic ways.
5. It is very likely that large numbers of Americans in their late 20s and 30s will continue to earn far less than those who are almost or even a bit older. So, certainly, try to focus your career choices on tasks that take less time and produce more money – so long as your cost of doing so is no greater than that of your older colleagues.
None of these approaches are a panacea. The driver for those who have worked their way through college or are paying off student loans is not to radically reduce their debts. The driver for those of us who need help solving our problems is to set a financial plan, with a retirement target, and the actions that lead to a secure retirement.
Making that transition from age 30 to retirement should not be a sprint, it should be a gentle and sensible glide path in which you gradually maintain your lifestyle, as your body and finances require, but make gradual room for the things you love to do.