Take Five: Protecting your financial future

A few weeks ago I met with La Cañadans David Penniall and Robert Bender.  Both men have a combined 100 years in financial planning and investment strategies. I wanted to get their take on the current economic challenges we all face in these increasingly uncertain global times.

Our discussions were purposely apolitical. Bender did make an interesting point, though, when he said the occupant of the White House is not as powerful as Congress in making tax laws. An election year could add more uncertainty to an already off-kilter market. 

I asked this question: Let’s say that I’m a 60-year old, locally-employed man with a good job in a medium-size company. I have a 401(k), and a savings drawing microscopic interest. I can see that my savings is losing value based on inflation. I plan to retire at 65 if I can.

I have a 93-year old spinster aunt, who has told my two sisters and me that we will inherit about $280,000, divided three ways. What should I be doing now? I don’t know much about investing.

Bender spoke first. “You’ve got to prepare yourself as soon as possible. Subscribe to magazines like Fortune, Forbes and Business Week. Look at the Los Angeles Times, Wall Street Journal and Financial Times. Get acquainted with all the jargon. Talk to your accountant and perhaps your lawyer. Check with close friends to find out about their own investment program.  Study constantly.

“But don’t kid yourself that you’re going to become an overnight expert. For sure, don’t fall in love with a stock and don’t chase what seems to be the once-in-a-lifetime deal. Watch out for high interest-paying dividends. Any dividend that’s currently paying out more than six to seven percent annually is a stop sign. Sounds too good to be true and most times it is.”

Penniall agreed and added, “It takes years to become an expert in any field, therefore, be cautious. Stay away from the ‘do-it-yourself’ model.  Begin now with your spouse to plan your retirement years.”

Underpin your planning with these concrete pillars:

1-Build safety nets as you sort through your options

2-Never forget caveat emptor—buyer beware

3-Don’t look to any governmental agency to bail you out of financial trouble. Be self- reliant.

Bender rang in again. “A solid defense against charlatans has been ‘caveat emptor.’ This so-called shield has come down, though, since David and I began our careers.”

The Madoff scandal is a good example.  People must become educated. Protect yourself against the too-good-to-pass-up purchase.

My take in the investment/retirement arena is, like it or not, we all live now in a global environment. Everything we do has world-wide consequences. But instant communication can mean instant education as well.

It’s self-evident that $4.50 per gallon of gasoline on Foothill Boulevard is a result of some activities not based in our city, Los Angeles or even California. So a lot of the control is out of our direct action, as is the high unemployment rate, the housing mess, and the overwhelming debt.

The three of us spoke about various types of investment vehicles: gold, silver, other commodities, mutual funds, and individual stocks.  Rather, they spoke, I listened and learned.

So, if you’re looking at a rapidly approaching retirement, or, if lucky, an inheritance, adopt the buyer beware attitude. A lifetime of putting together a successful family financial plan, however it’s constructed, can be wiped out in a flash. Don’t forget that greed only pays off in make-believe stories. Like movies.

We live in real life.

GENE PEPPER is a published author and writer. Contact him by email at gpep@aol.com or phone (818) 790-1990.

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