On The Shore On The shore — 05 January 2013
Suze Orman, wealth managers money advice

It’s a safe bet most South Floridians, in one way or another, have taken a financial hit of one kind or another over the past few years. If it’s not that the value of your home has dropped to the point where it’s under water, perhaps you’ve been laid off and had to dip (or dig) into savings to make ends meet over the course of a prolonged, scary job search. And as if losing precious, hard-earned cash weren’t excruciating enough, your personal debt may have been growing at the same time.

Once the worst of times has passed, it’s time to address how to rebuild your personal wealth. That may seem to be a daunting task when you’re starting out from a position of weakness. And undoubtedly, it will take longer than you’d like. But the key is to stay cool, map out a plan, and have patience as part of the means to reach your goal — and follow some very straightforward advice from some well-respected financial experts.

To start, says John Lacy, Senior Vice President of Wealth Management at Merrill Lynch in Palm Beach, identify and quantify realistic goals. When it comes to investing, know that volatility in value will inevitably occur with even the highest quality of investments. He recommends reinvesting dividends. “That takes the emotional decision-making process away from the investor and forces him to purchase incremental amounts of an investment when prices are declining and the headlines regarding the economy seem dire,” Lacy explains.

Another way to enhance investment income is by diversifying, not just across stocks but across asset classes. Forbes cited as an example a group of Japanese investors who tried to rebuild wealth by investing in stocks even as those stocks plunged from their all-time highs; the investors did suffer severe losses, but those losses were offset because they had also invested part of their portfolio in bonds.

With uncommonly tempting deals available in the real estate market right now, many are wondering if it’s a good time to snap up some property as an investment as well. Finance guru and best-selling author Suze Orman, who divides her time among Fort Lauderdale, New York and San Francisco, offers this caveat: “The bottom line is that if, and only if, you can get a steal, and you have at least 20 percent of the purchase price to put down plus an eight-month emergency fund set aside in addition to that 20 percent, then go ahead and buy it.”

Orman’s mantra is that it’s imperative to “be involved” with your money rather than just entrusting it to financial advisers. But with the interest rate offered on money markets at a national average of 1.2 percent, it’s difficult to know how to maximize the return on whatever money you’re able to sock away. “Whatever you do, make sure your money is in an account that is insured by the FDIC,” Orman says. She highly recommends a visit to the website www.ratebrain.com, which contains listings of interest rates on CDs, savings accounts, etc., with some as high as 4 percent.

Finally, Lacy says it’s important to stick to your plan, no matter how long the road may look. “Start small, but remain committed,” he says. “Confidence is restored through small victories you realistically achieve.”

– Lori Capullo 


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