The new year has arrived, and the expectations are for things to be better than in 2020.
That is exactly the forecast from most investment firms. Billions of dollars will be pumped into the economy this year, and that will generate additional spending. More spending means more goods sold, and when more goods are sold, more profits are made. When more profits are made, the stocks of those companies are in more demand, and that results in higher stock prices.
It really is not that complicated. You just need to figure out which of those companies will produce the goods that people want to buy, and then how long people will continue to buy them before the competition produces a better or less expensive product.
The only problem is that when debt exists, the lender has to be paid back at some point in time, and the United States Government (the lender) owes a lot of money. The good news is that interest rates are low and the stimulus will produce economic growth short-term. Economic growth will generate additional taxes.
To put it in different terms, it’s like eating dessert every day. We enjoy the sweetness of the moment, but there is a price to pay once the weight is added, the energy is lacking, and the health is negatively impacted.
What do we do? We can’t control government spending, how people vote, the rate of crime, or a few thousand other problems in America and around the world. So do we throw up our hands and surrender?
No. For now, if it’s appropriate, take advantage of the economic stimulus that should have a positive impact on the stock market. And be knowledgeable about tax strategies that will benefit you in the future. (This will be a recurring theme.)
Be wise enough to realize that those of us who pay taxes will foot the bill on the United States debt. That’s not a prediction — it’s a fact. This is one of the most important financial planning issues you need to consider at this time. The younger you are, the more important it is to absorb this knowledge. Implement financial strategies now that will minimize taxes in the future — there are some very good options available.
As stated above, the world is full of issues that will affect you and me that we can’t control, but you can control many of the financial decisions that will impact your future. Choose to be healthy and eat the right financial food, then celebrate with the dessert.
You get to choose your pain. It’s like exercise. Put up with a little pain each day to grow and stretch the muscles — the result is better health and less pain later. Or, avoid the pain now with no exercise and a great tasting diet that is unhealthy, and the pain of regret will be at your door later. Care about the future now and you will be able to enjoy a better life both mentally and physically.
