February 9th, 2009 by Jan Shimano

Not being an experienced investor, I have been very concerned lately as I watched my investments dwindling before my very eyes. I decided to do a little investigating with the hopes of coming up with some answers.

It has been my experience that whenever I am motivated to seek an answer to a question, that answer invariably appears, and so it was with my search. I had read Rich Dad Poor Dad by Robert Kiyosaki a number of times and found it very informative. A friend of mine recommended I read his book, Rich Dad’s Prophecy, so I ordered a copy. That book was a major eye opener for me.

We are all aware of the cyclical nature of the stock market. We expect it to go up, down and sideways. However, in the long term we always expect to see a gradual incline. Normally, if we were to look at a graph covering many years, we would see an upward motion. We are seeing quite a different picture these days and it is a rather frightening situation.

A major part of the problem is that by the year 2016, the first of the 75 million baby boomers in the U.S. will be turning 70. A large percentage of these people have money stashed away in a 401k plan. When these baby boomers reach age 70 1/2, they will be obligated under law to remove all their money out of their 401k plan. They are going to have to liquidate their assets. Just think about that for a moment!

In the not too distant future, millions of people will be selling off the mutual funds and shares they have in their 401k because the Government has told them they have to. The Government has been waiting patiently to receive their tax dollars and now their day will have come. This is a major disaster waiting to happen. Undoubtedly, there will not be enough purchasers to offset the massive selloff during this period of time. It is possible that the U.S. Government could amend the law, allowing assets to stay in the 401k for a longer period of time, but then they would be delaying receiving their tax dollars.

Even though most people realize they are in financial trouble, they don’t understand the full impact. The advice they are being given is to still diversify, sit tight and ride out the storm. A great number of them seem to be following that advice, but this is what Warren Buffet says about diversification….”Diversification is a protection against ignorance. It makes very little sense for those that know what they are doing”.

It’s not too late to get a handle on your finances and make some intelligent decisions. Seek out the education you need to fully understand your financial position and take action now, to secure additional funds to see you through your retirement. The experts tell us that a home-based business is one of the wisest choices a person could make, especially during this economic climate. It is well known that fortunes can be made during such a time. There are many great opportunities out there. Go and find yours and take action.

diversification, economic recession, Finance and Money Management, finances, financial insecurity, financial security, Home based businesses, job loss, loss of income, mutual funds, stock market