Analysts of the market, with special reference to those who have made a strong grounding in the media are of late presenting a very miserable future for the world of economy and consequently to the forms of life of the people. In fact if the information here is to be believed then these people are not quite manipulating the truth.
The global stock downturn is said to have begun on Thursday when the Dow fell to a two-year low, dropping 3% in the process. This has led to fear on Wall Street that rising prices and tighter finances will force Americans to curb spending and send the economy into recession, though this is not exactly a new worry.
In comparison US consumers received positive news with the economic stimulus package, which will hand out in the region of $107bn to American this year. The news led to a household budget boost and had a knock on effect of consumer spending rising by 0.8%. Some experts have remained pessimistic though as most of the rebates have been placed in savings accounts rather than being spent.
Global stock markets are tumbling in response to a sell-off that has been sparked by concerns about the global economy and the recent record price of a barrel of crude oil.
The hardest hit has been the Dow Jones in New York, which closed having lost nearly a percent of value. Paris and Frankfurt closed that day down 0.6% whilst the slightly more extreme Asian markets in China and India dropped by 5.3% and 4.3% respectively. At the same time a barrel of crude oil now costs in the region of $142 after concerns regarding supply have led to another price rise.
Comparatively speaking things this side of the Atlantic are positive. The FTSE shrugged off early losses and battled up to a 0.2% rise. The current problems in global credit prices find their roots in the American sub-prime crisis and as the economic situation of different elements of the world are so closely tied together the FTSE will only be able to survive a global stock fall for so long before it too begins to suffer. Further it suggests that the current high mortgage rates and difficulty of securing credit don't look like they'll be alleviated in the near future.
The global economic situation is a tangled web, finding it's roots in stocks and shares, global oil prices, and a credit shortfall world wide as institutions try to protect themselves. This in turn leads to higher living costs as petrol becomes more expensive, transport of food leads to increases in supermarket costs etc. Saving money, therefore, seems like the best idea, but it does not help to stimulate the economy.
For the moment, it seems like the global downturn is going to stick, and for many it's just going to be a case of holding tight and riding it out.
Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.
Not very smart of us, is it?
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are...long term and short term.
Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won't work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in "free budget forms".
You'll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it's something you can stick to.
Before you consider investing in any type of market, you should really take a long hard look at your current situation. Investing in the future is a good thing, but clearing up bad - or potentially bad - situations in the present is more important.
Pull your credit report. You should do this once each year. It is important to know what is on your report, and to clear up any negative items on your credit report as soon as possible. If you've set aside $25,000 to invest, but you have $25,000 worth of bad credit, you are better off cleaning up the credit first!
Next, look at what you are paying out each month, and get rid of expenses that are not necessary. For instance, high interest credit cards are not necessary. Pay them off and get rid of them. If you have high interest outstanding loans, pay them off as well.
If nothing else, exchange the high interest credit card for one with lower interest and refinance high interest loans with loans that are lower interest. You may have to use some of your investment funds to take care of these matters, but in the long run, you will see that this is the wisest course of action.
Get yourself into good financial shape - and then enhance your financial situation with sound investments.
It doesn't make sense to start investing funds if your bank balance is always running low or if you are struggling to pay your monthly bills. Your investment dollars will be better spent to rectify adverse financial issues that affect you each day.
While you are in the process of clearing up your present financial situation, make it a point to educate yourself about the various types of investments.
This way, when you are in a financially sound situation, you will be armed with the knowledge that you need to make equally sound investments in your future.
Both Shahid259 Shaikh259 & Mike Beo are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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