FINANCIAL NEWS YOU CAN USE
Meeting your financial objectives
by Walter Prochorenko
This is the first article in a series that will attempt to provide some guidance and information in a world that has become extremely complex and confusing. The articles are meant to inform and are not intended to replace advice that is best obtained from professionals such as accountants, attorneys, financial advisors or insurance professionals.
As an example of this complexity, according to the Investment Company Institute, in 1940 there were 68 mutual funds, but by the year 2004 the number grew to well over 8,000. Worldwide there are now over 55,000 mutual funds. It is then no wonder that it has become quite confusing to select proper funds for one's portfolio.
However, mutual funds, although a favorite investment vehicle (with over $2 trillion invested in the U.S. alone) are only a part of the total investment and financial security strategy that should be considered by people with an eye toward the future. Other investment vehicles should be liquid assets such as bank accounts and CDs, good insurance coverage to protect assets and earning potential, proper tax planning, estate planning, real estate investments, annuities and a number of other products that can enhance lifestyle.
If one were to ask the average person what is his/her most valuable asset, the usual answer tends to be one of the following: a home, a car, a boat, land, collectibles, jewelry or investments. The proper answer, however, is one's earning power. The average wage earner will earn from $1 million to several million dollars over his or her lifetime. And yet, this most important of all assets is rarely insured against disability, major illnesses, debilitating accidents or even long-term care.
But I'm getting a little ahead of myself. First let us bring together what should be a prudent set of criteria to consider and follow when establishing financial goals. A good plan can be implemented by using the following 10 simple guidelines established by well-known firms that deal with these issues on a daily basis.
The best plans in the world, however, can be little more than characters on a piece of paper if these plans are not implemented and followed. But even the best of plans are obsolete the day they are drawn up since we all know that life is constantly in flux. Therefore, plans need to be flexible and malleable in order to deal with what life throws at us.
To start considering a plan which will help formulate a strategy to meet one's financial objectives, let's first take a look at the possible components that will need to be considered.
Capital Accumulation and Appreciation
Capital Preservation
Capital Distribution
Professional Assistance
In the next four articles we will deal with capital accumulation, capital preservation, capital distribution and professional assistance. Future articles will deal with specific issues within these areas.
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NOTE: We will welcome any articles dealing with financial, insurance, estate and tax planning, and similar issues from the many Ukrainian professionals in these fields. Since we are a community newspaper, we welcome and encourage the participation of our readers and members in a meaningful dialogue that will help all our brethren. - Walter Prochorenko.
Walter Prochorenko, Ph.D., is an accomplished businessperson with extremely varied multi-national project experience in over 40 countries, including Ukraine. He completed his doctorate in international business administration, is a registered NASD and insurance professional in New York and New Jersey, and is a Chartered Wealth Manager.
Copyright © The Ukrainian Weekly, March 5, 2006, No. 10, Vol. LXXIV
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