Financial Security: Is Your Family Covered?

Provided By www.stockandbonds.org

The word "security" has a comfortable connotation, but a large majority of families would be placed in an awkward position if they were asked to define their own relative security. They might feel that a home, food and clothing, and the comforts of modern life make them secure. Many overlook the fact that "security" in today's fast-paced society means far more than today, next week and next month.

We must emphasize that "financial security" does not mean simply the ability to buy enough meat and bread, enough clothes and shelter, a car and a television set. Quite the contrary, because for many these are usually unplanned and part of vague so-called "needs." Because of a lack of knowledge of the underlying principles of financial security, many people are lulled into a false security and feel that they are secure when they really are not. Others have an attitude of resignation, feeling that such security is something they cannot attain. Still others are completely indifferent. Many of these people are buying a home and life insurance, both of which are good first steps toward ultimate financial security; but they fail to realize that to be able to combat unexpected reverses is a difficult and worrisome matter and that they have not come face to face with this problem.

Is it possible to attain a fair measure of financial independence? The answer is definitely "yes," as is amply shown by the thousands who have realized that they were getting nowhere fast and have succeeded in doing something about it. Let us make clear, however, that those persons who merely have good intentions—those who talk about saving but never save—will not achieve real security.

How may financial security be obtained? All authorities agree that careful planning is necessary for financial success; all agree that financial success is necessary for financial peace of mind. This means that if you wish to get "off the treadmill" and partake of a richer life, you must be willing to undertake such a plan wholeheartedly.

Before you draw up your plan for investment, it will be necessary to consider carefully the objectives you want to achieve. Let us suppose that conservation of principal is a "must"; then what else may be expected? Much will depend upon a proper choice among these three — regular income; income plus capital appreciation; capital appreciation alone. Let us see how the selection of one of these will depend upon the personal needs of the investor.

John Doe is 53. He has worked hard all his life, and it is only after reaching middle age, with his children married and "on their own," that he has managed to accumulate extra funds for investment purposes. His health is good, but he plans to retire at the age of sixty, and for this reason alone he is interested in security of principal coupled with a steady income upon which he can depend. Are bonds for him?

Richard Roe is a much younger person (33) and has a wife and two small children. He carries adequate life insurance and is buying a home. Both he and his wife take the "long view" of their future and wish to invest in something that may show a considerable increase in invested principal over the years, income being secondary. Are common stocks for them?

Outline all of your personal risk factors, such as children, old age and new purchases, before you put together your investment portfolio. With the guidance of a good financial planner, gaining security for your family's future does not have to be an overly stressful process. An experienced professional can help you decide where to invest your money for maximum return over the long run, and he can also help you put together a will that lines out how your assets will be distributed.

Yes, the process is difficult for many people, but the alternative to acting quickly can be much worse.

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