Watch Richard E. Reyes, CFP on Fox 35 with Bob Friar.
Listen the truth of the matter is that the information as provided to us by S & P did not tell us anything we did not already know.
The reputation of S & P and its ratings in the past was always more reactive and they have obviously paid the price in the past. However, they are now trying to be a little more proactive. Although timing for this type of information is always bad and you have to be careful of yelling “fire” in a crowded theatre, the timing of this could not have been better. With all the fiscal and political chaos going on in Washington, this is definitely a warning shot for Politicians to hopefully get serious.
To put things in perspective, people have to understand that what the S & P just put the U.S. on a “negative” watch and has stated that if the U.S. does not change and begin to make more serious attempts becoming financially responsible, it has a 33% possibility that their AAA debt rating could be cut below AAA within the next two years.
So What Happens If Credit Rating Is Cut to Below AAA
Basically what will happen is that due to the credit worthiness of the U.S. being lowered to below AAA, credit risk from the point of view of the investor will be higher. Investors in turn will require higher interest rates due to higher credit risk. In turn interest rates will have to rise.
This will in turn cause it to be more expensive to do business and Company’s will find it more expensive to borrow money which can in turn cause them to increase prices of goods and services to the consumer.
Should I Still Invest in the Stock Market
Over time a broad globally diversified portfolio will do just fine. Always understand that equity’s are long-term investments. When you are invested in the market, you are invested in Company’s. Company’s will always find a way to survive as no matter where we are in our economy, there will always be demand for products and services. DON’T EVER SPECULATE, GAMBLE OR MARKET TIME WITH YOUR MONEY. DON’T EVER USE AN ADVISOR OR MONEY MANAGER THAT WILL SPECULATE,GAMBLE OR MARKET TIME WITH YOUR MONEY.
What Should Our Clients Do
We deal specifically with individuals and families who are near and/or newly retired or already retired to provide real sleep well at night solutions to stay retired. If you are in the stage in life you should make sure that you have your house in order and are working with a qualified advisor who works specifically in this area. Understand that there is not, nor will there be, a single investment or product that will fix all your concerns. Only a real plan will help!
If you are looking for a brief, plain-English introdution to investing, don’t forget to BUY my book, Dirty Filthy Lies My Broker Taught Me & 101 Truths to Money and Investing. Order my book now and I will also send you my Investor Awareness Guide and listen to our The Seven Deadly Investor Traps that Destroy Your Wealth and the Three Power Strategies to Fix Your Portfolio Fast! These materials will equip you with the information you need to begin putting your investment experience back on track.
Wealth and Business Planning Group, LLC (The Financial Quarterback™) is a Registered Investment Advisor in the State of Florida that provides Fee Planning and Asset Management. Depending on your state of residence, Wealth and Business Planning Group, LLC (The Financial Quarterback™) may not be able to immediately provide services. For more information go to www.thefinancialqb.com. Richard E. Reyes, CFP is an Investment Advisor and President of Wealth & Business Planning Group, LLC (The Financial Quarterback™).