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Ponderings For the Week of August 19 to 25, 2019

Third Straight Week of Stock Losses

The global economic slowdown and low interest rates combined to sink stocks last week. A rally early in the week over a delay in some tariffs had investors dreaming of an end to the recent slump, but later news dampened their hopes. The interest on the 30-year Treasury bond dropped to a record low near 2% and German and Chinese economic conditions are weakening. But stock prices rose later in the week as fears over an impending recession receded a bit due to encouraging U.S. economic reports. The strength and sheer size of the domestic economy contrast sharply with overseas conditions, which is hoped to lead foreign investors to seek safer havens here. 

For the week, the stock indexes fell 1%, more or less, with international stocks dropping a bit more. Despite all the bad news emanating from foreign climes, however, overseas equities are still up 5% for the year so far.



Setting a Good Example for the Youngsters in Your Life

It’s not easy raising children.  Never has been, but it seems to be harder now than it was for earlier generations. While there are far more important child-rearing responsibilities, the one I’d like to proffer is to strive to set a good financial example for the children or grandchildren in your life. This includes being prudent in the way you spend, save, and invest. Periodically discussing the family financial and investment situation with your kids will also help them understand the challenges that families must confront to be successful financially.  

Another matter to keep in mind (as if this isn’t obvious to you already) is that kids differ in their attitudes toward money, just as they differ in just about every other facet of their lives. Our three daughters could be a case study. One is quite responsible, another loves to hoard money, while the third is helping boost the economy, particularly the clothiers. The point here is that as you endeavor to help your kids become financially responsible adults, take these differences into account. Finally, avoid the temptation to indulge them financially. Sometimes, the best financial advice you can give to a rapacious youngster is: “We can’t afford it.”  



Smart Money Tips

  • The key to successful investing. Successful investors are more concerned about how their money will fare over the next ten years, not the next ten days or ten months. Perhaps the hardest thing you’ll ever do as an investor is stand firm when you’re losing money week in and week out, as always happens from time to time in the stock market. But this is crucial, because stocks usually rebound very quickly after the market bottoms out, and no one can predict when that will happen.
  • Important auto insurance considerations. Automobile insurance protects automobile owners from the potentially large bills an accident can bring. Automobile insurance also protects the car owner from theft and provides some liability protection. Here are some tips on getting the right coverage without wasting money.
    • Buy sufficient coverage in essential areas such as bodily injury and personal liability, but reduce or eliminate coverage in other areas such as collision and comprehensive if you own an old clunker.
    • Don't buy cars that cost a lot to insure and invite the attention of auto thieves. Really, your image won't suffer if you own a homely car.
    • Don't waste money on car rental insurance if you don't need to. If you're going to rent a car, find out in advance if your automobile insurance policy will cover it (most do).If you’re not accident prone and you can afford it, increase the deductible on your auto policy to $1,000 or more.



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