Financial Asset Management – A Different Perspective

Almost crayon level financial asset management

Financial asset management: promoting wealth preservation. A different perspective, perhaps only a little above the crayon level.

When it comes to my abilities in the arena of financial asset management, I don’t consider myself to be more than a couple of notches above the crayon level. Although I’ve been free of debt for quite some time now, it’s not because I’m a financial wizard, it’s mostly because of my natural inclination to aim high and be financially conservative. If you listen to my sweetheart Ellen, she might also suggest that I have some sort of a crystal ball.

Whatever the case may be, I’d like to offer a different perspective on wealth preservation in light of what I see as our ever-changing economic climate. I think you’ll find much of this discussion to be applicable, regardless of where you might be in terms of debt.

Take notes if you wish. Just choose your favorite color, and try to stay within the lines.

The Financial Climate

I don’t closely monitor the economy, our financial system or general marketplace, but even the casual observer can’t help but see clear signs that we’re headed into stormy times. We’re raising the debt ceiling so often that having one doesn’t seem to matter anymore. Inflation and the high cost of oil is causing us to expend more dollars on nearly everything. Precious metals like gold are at or near record high prices. Many segments of the marketplace that took a beating years ago still haven’t recovered. Unemployment and under-employment are so prevalent, severe and persistent that we’ve changed the way we’re reporting it, so it doesn’t look so dismal.

There are people in the know who are predicting financial collapse of our economy, and they’re pointing to economic disarray in the European Union as a sign of what’s to come for America.

Weathering the Storm

With a gloomy outlook on the horizon, what might one do to be better prepared or otherwise come out of this storm cell in decent shape? It’s a serious question to ponder. What should we be doing with our income, and if we have savings, what should we be doing with that? As poet Robert Frost suggested, the path we choose can make all the difference.

Investing in precious metals is popular because they have intrinsic value, and they tend to hold value. The most successful financial systems in the world have been anchored to or composed of gold and silver. It’s tough to argue against thousands of years of evidence, nevertheless, when a gold coin the size of a silver dollar costs $1,700 in today’s marketplace, it’s easy to see why this wouldn’t naturally be a first choice for the average person, so let’s look elsewhere.

What might our financial asset management approach look like if we’re not going to protect our wealth by investing in bars of gold and silver, and we don’t want to risk our money in the stock market? Here’s my perspective on what we might do in a different vein to preserve our financial assets rather than allow them to evaporate through inflation.

Land – generally I’m a big fan of land. Will Rogers referred to the value of land by simply saying, “They ain’t making any more of it.” Land has traditionally been a safe investment, and it’s one that can work for you if you have a mind to grow and raise your own food. It can also pay for itself and create a stream of income if you elect to grow something to sell like trees, bushes for landscaping, or rare wood. And, if you live on your land, that’s all the better.

Housing – with the housing market depressed in many areas, now might be a good time to take a look at what’s available. I’m in favor of paying off the mortgage, and that’s much easier to do if you select a modest home in a buyer’s market. This might be the time to downsize so the proceeds from the sale of your home can get you closer to being free of a mortgage. Your savings in housing payments could be invested elsewhere or used to pay off other debt.

Education – the marketplace is always changing, and if you’re able to change with it, you can enhance your earning potential. Just about anything associated with information technology is in high demand now and pays well. Some high paying skilled trades are also in great demand. Learning a technical skill requires a much lower investment in time and money, and may be a good alternative to a traditional college degree. Investment in education is generally a good one because it’s something that stays with us, and we can put it to good use throughout our life.

Tools and equipment – having appropriate tools can help you offset expenses and provide yourself with a source of income. As an example, perhaps you invest in a portable welder, one that’s engine driven and mounted on a trailer. It might be just the thing for you to use around the house and in a sideline business, and you could rent it out. Either way, it pays for itself and becomes an asset that creates a revenue stream for you.

A business of your own – there are any number of businesses, especially service businesses, that require limited investment in terms of vehicles, equipment, materials, supplies and so forth. Some can be a source of high income. Since you’re in charge, I’d suggest that your capital investment would be in good hands – probably the best possible.

Start Thinking

Your particular approach to financial asset management is something you need to invent on your own. You can get advice from any number of people, but in the end, the decision is yours. The suggestions above are simply examples of what I consider to be viable alternatives to help shield your wealth from the effects of inflation. I’m certain there are many others that are worth considering.

Let me suggest six criteria that might help you identify suitable means of preserving your wealth:

  • Widely recognized as valuable
  • Having value that lasts and appreciates
  • Generally in demand in a wide range of economic climates
  • Capable of producing income and/or offsetting expenses
  • Something that can be converted into money with relative ease
  • An investment for the long haul

Pick one or more, mix and match. The choice is yours.

I certainly would hold a portion of my savings in cash, just to be able to conduct daily business, but it’s clear to me that cash isn’t going to appreciate much, nor will it hold its value. It’s fiat currency, it has value simply because we say it does, and you can imagine what happens when we stop believing what we’ve been told for so many years.

Consider this, a gas station recently offered gas at 10 cents per gallon if you made the purchase in pre-1965 dimes, quarters and half dollars. Clearly, this is one business owner who sees more value in something other than our paper money. He’s not the only one with this perspective, but he might be one of the few who are more prominently displaying their preference for something other than federal reserve notes.

And, as I recall, it was a homemade sign displayed at his gas station, probably drawn with crayons.

photo credit

About Clair Schwan

2 Responses to “Financial Asset Management – A Different Perspective”

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  1. Eddie G. says:

    Excellent blog! I’ve always thought investment and asset management are just as important as being debt free. Awesome perspective.

  2. Clair Schwan says:

    Thanks Eddie. I tend to view things differently, and I think that helps sort through various options that might otherwise be overlooked if I were to stick with a traditional view of the world.

    As we get closer to what might appear to be inevitable financial meltdown, it concerns me greatly that those who have worked hard and saved will lose out because of inflation. Oddly enough, those will debt will enjoy paying off their debt with inflated dollars, especially if inflation runs wild and their wages follow along with it. None of this becomes a concern if we eliminate our debt and get a better financial foothold by investing in ourselves, our place of residence, our future economic engine and items and resources that have intrinsic value – and are under our careful management.

    Of course, asset management and capital preservation are challenging, but it’s a good sign when one finds that they have this challenge to face. Even if we don’t choose wisely in this regard, we’ll be in better shape than those who have no need nor interest in facing the challenge in the first place.

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