As a financial planner, I am frequently asked about credit cards, and what someone should do with credit cards that they no longer use. After running across this topic on a credit card forum, I decided it was time for a post.
People will debate about the reasons to keep credit cards open, including using them for emergency spending, instead of or in cases of no emergency funds as part of a holistic cash reserve strategy. Credits cards are not emergency funds. 100% correct. However credit cards MAY be the solution for the large part of America that does not have enough in savings. Let’s examine how credit cards and other credit products may fit as part of a holistic cash reserve strategy.
Often times I have discussions with people and the conversation turns to the topic o f what makes a good investment? Now we are not talking about trading stocks, where you really do not look at the company but rather the way the company’s stock trades. What we are talking about is the old fashioned way of picking investments. We are talking about the Warren Buffet way of investing. Investing in the company that you love and understand. A company which you would be happy to invest in and hold for the long term.
One of the companies that I have long followed is Blackberry (BBRY). As part of my own due diligence, I follow the company news and events, and communicate with other investors. One such community of professionals is SeekingAlpha. After being inspired by a few members, I decided to submit an article and it was chosen by the editors to be published! Even though I have spoken at various conferences, this is the first time I have been published outside of this very blog or the bi-weekly email newsletters.
Instead of detailing broad outlines of how you may go about selecting your investments, you can read about my thought process, on why BBRY is a stock that I personally own.
Why use Alternative Investments?
Alternative investments make up a good percentage of our clients’ portfolios. We use alternative investments for a number of reasons, most of all, to reduce the overall volatility in the portfolio, and to get exposure to asset classes and strategies that are typically not employed by individuals and brokers. Having alternative investments in 2007-2008 would of greatly soften the blow most individuals felt. Even though people thought of asset classes such as international stocks, bonds, commodities as “alternatives,” during the panic everything was sold off that was liquid. Many individuals just wanted to “sell” and they did so without wanting to look at what the actual investments were. Due to this panic selling, correlations on most asset classes went up, that in the end it almost did not matter what the money was invested in, it all got sold and went down in price. We use alternatives that either can take advantage of such sell offs, or are not subjected to the effects of such sell offs.
We had a really interesting discussion at the office today regarding the low oil prices and whether it was a good or a bad thing for the United States. When I heard the same conversation hotly debated on CNBC on the drive back from a meeting, I knew it was time to write about it.
So what do you think? Is it a good thing or a bad thing?
Personally, I believe it is an answer of “It depends.”
In the short term, I believe it is a good thing, a good thing for consumers. Time and time again we have evidence that lower oil prices, and thus lower gas prices, leave more money in the wallets of families to spend. The United States is not a nation of savers, but rather spenders, especially around the holidays. Only in the states will you be gently jostled by your friends and coworkers because you have the iPhone 5 and not the iPhone 6 plus. Lower energy prices will no doubt increase sales and the bottom line of retailers.
Lower oil prices are also good news for airlines, cruise ship operators, industrial producers and other manufacturers. Their input costs will go down, and thus raise the profits for the shareholders. Once again, there are little doubts that this will be a positive catalyst in the short term.
What about the long term?