Wile E. Coyote’s Acme Budget & Debt Ceiling Kit

Who would have guessed that the Looney Tunes cartoons of my childhood would be the reality of my financial advisory adulthood? I can’t help imagining all the Wile E. Coyotes of Washington DC chasing the illusive fiscal Road Runner. Some will reach for the speedy bird and end up grabbing the third rail of health care (ZAP, sizzle). Some will be squashed by the falling  anvil of debating debt ceilings(THUD), and others will argue everything until their heads over inflate with hot air, then burst as their hands continue to wildly gesture and point.  (wwwwwPOPPPP). What are the odds that all will be fixed with an Acme Budget & Debt Ceiling Kit? I  never really found the plight of the Coyote very funny, and I certainly can’t laugh at what Washington officials have created for all of us. So, what’s an investor to do?

No Crystal Ball or Acme Budget

The next ten years, like the past ten years, for investors, is going to require a hands-on approach to personal finance. The buy and hold tenants of long-term investing will not yield 10% returns in large-caps, 14% rewards for small-cap stocks and 5% low-risk returns for bond holders. Instead, investors and their advisors will need to pay close attention to market valuations and risk premiums. In a world of crazy interest rates, investors should abandon blind trust in the diversification of bond mutual funds, and instead become knowledgable on the effect fees and longer maturities have on their dollars. While individual bonds may be the answer for some, no-load short-term bond funds and fixed maturity bond ETFs are worth the research. Likewise equity investors must understand that buying a broad index fund subjects a portfolio to the type of market volatility many complain about. By taking time to study individual stocks and utilizing sector ETFs, investors can avoid the broad brush approach to equity investing.   While Washington may be prone to slapping paint on a mountain and calling it a tunnel, remember it was the Coyote that always got run over by the Mack truck. Don’t wait for the Acme Budget to cure what ails your assets, take charge and create your own plan, today.BeepBeep!