Although it is clear that this crisis has been affecting investors for months, its impact on ordinary people in the developed world has not yet been fully felt; nevertheless, it is already knocking on the doors of millions of people. Unfortunately, in the developing and underdeveloped world pouring down on the flooded area, because the need for alternative biofuels is causing a famine that should concern us infinitely more than UBS’s accounting problems, to give a stupid and shameful example.
Just like the pessimism about the property market It hinders the healthy growth of our wealth; the nomadic practice of parking money in bank deposits, scraping together tenths of a percentage point above the Euribor – here today, there tomorrow – does nothing to promote the sound, planned growth of our cash. However, compared to strategies that focus solely on rising share prices and the short term – which have made thousands upon thousands of investors rich in recent years – those entrenched in savings accounts will form the elite of those who knew how to exit the market in time and will be envied for weathering the winter without losses until the stock market spring returns (although the Japanese have been waiting for it for 18 years). But there is an opportunity cost, and in times of crisis it tends to be high.
In short, both the Pessimism in the property market such as the Financial Absenteeism represent a dangerous shift in the healthy growth of our wealth, which we must safeguard throughout our lives and in any economic climate. Some of you might say that avoiding losses that would severely erode our wealth is an achievement in these times. Of course, it is a lesser evil and, for many, a pipe dream, but we should only be content with avoiding a decline in our wealth if we are unable to maintain steady progress with reasonable guarantees of success, whether on our own or with help. Furthermore, success in achieving such steady progress will depend entirely on the PGR designed and based on the unique characteristics of the individual or family.
Here we must make it clear that financial success should not be defined solely in terms of maximising financial returns. Wealth and happiness are concepts that we must address together, as the former often poses a serious threat to the latter, as we can see from the following chart:
«A concert is not merely a performance of an album, but a theatrical event»
Freddie Mercury
Similarly, we can say that managing our wealth is not merely a matter of applying economic principles to our investments, but rather the perfect harmony between Happiness and Wealth throughout our lives and those of our descendants.
But returning to the steady growth of our assets and the show that must go on, we must not simply resign ourselves to a change of scenery. What we must do is adapt to it. Like the mouse in search of new cheese. Financial inaction can cost us irreplaceable opportunities, in terms of both quality and quantity, when it comes to our wealth. And, at best, we only have one lifetime in which to grow it.
We do not intend to encourage anyone to venture into investments whose risk is beyond their means or for which they are not suitably qualified. Far from it. We simply wish to share with you all the criteria and guidelines we work by as a Family Office. This is the path we believe to be the right one, and one that our clients follow with our guidance. And this is what we wish to explain and share on this blog for small and medium-sized investors. How each individual applies this will depend on whether or not they share our criteria and protocols, on their individual capabilities and training, and on whether or not they wish to receive our support.
We can hardly hope to reach a safe harbour if we do not know the right course. Only by understanding our objectives and limitations can we focus our efforts on trying to overcome winds y tides, such as the current credit and energy crises. Some will succeed. But without clarifying the route, the destination and our level of self-sufficiency, the chances are nil.