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VOL. 6 | NO. 23 | Saturday, June 01, 2013

Editorial: Financial Climate Complex as Ever

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Invest and hold has become invest and monitor in the world of personal finance, which means the days of forgetting about where a substantial part of your money is parked is probably over.

As our cover story points out, U.S. Treasury bonds – once a worry-free harbor for reliable returns at low to no risk – haven’t been that in the post-recession recovery. Before we address the issue of complexity, let’s talk about the need now more than ever for financial literacy. Building wealth is still a necessary goal that has been made more complex by changes in even the most basic forms of investing.

The ability to build wealth may be the single most important factor in the evolution of Memphis from a place with historically high levels of poverty to a place where families of modest means have enough savings so that the slightest jolt in the economy or their workings lives does not mean instant poverty.

We’ve heard from investment officers and advisers who debate whether the time honored 60/40 rule of investing is gone never to return or whether it has just become a more volatile but manageable split. Wherever you and your adviser are on that spectrum, this is the time for the basic questions that will give you an understanding of where your money is and how much risk there is. That means asking and getting information on the next move that now comes much quicker than the old model of holding indefinitely.

It even reworks the definition of what a conservative investor is.

This shouldn’t be a guessing game or a conversation filled with buzzwords that investors make like they know the true meaning of.

There is already entirely too much investor speak from the written and digital notices to the meaningless opening statements in entirely too many quarterly earnings calls.

This is where we make the argument we have made over several years of editorials on this general topic.

Basic common sense language must become a part of the numerous notices that now flood the in boxes and mail boxes of investors.

Federal regulators have an obligation to continue to make the technical wording in notices now required by law much more basic and understandable. A small book of a notice does nothing to help an investor understand a transaction or strategy if it’s written in the same legalese with Byzantine footnotes that used to come in the shorter notices.

There is a middle ground between the necessary complexity of such disclosures and an over-simplified explanation that leaves out important technical details. What we have now is nowhere near such a middle ground. And it raises questions about whether those selling the investments understand exactly what they are selling.

That too is an imperative as smaller banks add wealth management and investment products via partnerships with large investment firms.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 38 349 15,066
MORTGAGES 111 449 19,779
FORECLOSURE NOTICES 33 91 3,886
BUILDING PERMITS 0 512 35,842
BANKRUPTCIES 62 309 14,343
BUSINESS LICENSES 18 138 5,129
UTILITY CONNECTIONS 69 385 21,817
MARRIAGE LICENSES 13 106 4,663

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