Sorry, but, in case no one ever told you, there are some things related to your eventual financial success you cannot control. At least until you get yourself elected Galactic President for life. Even then, you might have trouble controlling the following factors. Some things are simply too amorphous to yield to dictatorial whims.
But don’t get too bent out of shape. Later we’ll talk about the things you can control. Here’s what you can’t:
1. Business Cycle – The eternal cycle of expansion, recession, and recovery are not anything you can do very much about. It’s important and affects lots of other things but, as Mr. Obama is finding out, does not lend itself well to ham-handed intervention.
2. Gross Domestic Product – Reflects the economic activity and financial health of the nation. Less than 2% growth is anemic. More than 4% is vigorous.
3. Index of Leading Economic Indicators – This average of 21 key economic components is intended to predict the near term future direction of the economy. When the index falls for three straight months, we associate it with slow growth.
4. Consumer Price Index – The CPI index measures the prices of an array of consumer goods and services. The eight major groups are: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.
5. Inflation – As inflation goes up, purchasing power goes down. Most investments get killed by inflation. A critical part of your financial literacy is about the unique method of investing that actually thrives in inflationary times.
6. Interest – This is the percentage you will pay to borrow money. Unless your last name is Bernanke or you happen to be one of the puppet masters pulling his strings, you can’t do much about this either.
But never fear! There are plenty of things you can control that will set you on the road to incredible financial success. We’ll talk about them next time.
The Young Wealth Team