Austerity’s Meaning to You
The word “austerity” has received a great deal of press lately, and I don’t think that people fully understand the far-reaching consequences of it.
The most recent stimulus for the austerity press is a result of the current situation in Greece, where they are in default again, or at least, there is a fear of default. This should not come as a surprise. Since Greece’s independence in 1829, the country has been in default more often than they have ben current with their debt. Also, keep this in perspective. Greece only represents a fraction of 1% of the world GOP. Consequently, their situation has little impact on the global equity markets.
Austerity, by definition, is when the government reduces spending as well as benefits and social programs. It appears that we have austerity measures coming here in the United States. There are two very important consequences of this action.
First, historically equity markets tend to increase after austerity measures are passed. The reason for this is that when the government gets their financial house in order, it tends to leave more capital and resources in the private sector [increasing growth, innovation and production]. Second, and most significantly, when social programs in the United States are reduced, for instance Social Security and Medicare, it requires you to be able to produce more income from your portfolio. You need more retirement income to make up the gap from the reduced programs. In order to produce the retirement income necessary for the remainder of your life, you must have more savings and investments.
To accomplish this, one must [acquire] superior knowledge of [investment strategies and practices]. Without them, you will not be able to produce the [savings and investments] needed to last throughout 30 years of retirement while making up the shortfall created by austerity [measures taken today]. Work with an Advisor that possesses [this] strategic knowledge and, remember, your financial survival is on the line.
Tags: Austerity, certified financial planner winter park, david witter, financial harvest wealth advisors, katie miller witter, winter park certified financial planners, winter park investment advisor, world debt