I know Economists and Financial Advisors aren't the same, but I wonder if anyone could give a General Focus for Financial Advice. I apologize if there is a topic similar to this already.
I've only recently in the past month come to discover the LvMI and the Austrian School of Economics--I swear Hayek is a familiar name from AP Macroeconomics, but I can't remember how my teacher presented the material in the course.
From what I've gathered, Austrians would like to abolish the Federal Reserve Bank and return the country to Sound Money, while eliminating government intervention. I am not sure how implementing such changes in economic policy would affect me as an individual, though I do like the long-term macro effects.
I just started my career this year (a fairly secure Job assuming the major economies of the world don't collapse or fall into another Great Depression). I have a mild debt load from School Loans, and some Credit Card debt from then as well, though not as much as before I was hired this year. I have been avoiding contributions to my Savings account, in favor of paying down my debts, and have opted out of my employer's Retirement Investment Plans. I have a monthly budget surplus, though my spending has been a little loose during the Holidays.
My question is 'considering the present market environment, how would the Austrian School approach saving for the future?' Should I keep plugging along as I am and erase my Credit Debt over the next 12 months? Should I go for a Spartan-eqsue lifestyle and pay down that debt in 6 months? Should I begin monthly contributions to my Credit Union's Savings Account? Or should I look to start contributing to an Investment Fund, through my employer (IRA, Index Funds, Mutual Funds, etc.) or my own?
I appreciate any advice or general information you can provide.
''I just started my career this year (a fairly secure Job assuming the major economies of the world don't collapse or fall into another Great Depression)''.
In other words you do not have a secure job. On the issue of your debt, considering that we will have rampant inflation I would advice you to pay off your debt as slow as possible as the burden of your debt will decrease in real terms with inflation. And get your savings out of currencies as we will likely have currency wars, which would make currency denominated savings worthless. Put your savings into physical assets, whether that be precious metals, or property, etc., just anything but currency.
'' The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.'' Stephen Hawking
The Tovarish is right methinks. The worlds biggest currencies are fast approaching the end of a bubble right now, all with significant debt exposure to each other. The US might not default, but the economy will be devastated preventing it. There is a "shit hitting the fan" day coming in the next couple of years and dollar denominated assets aren't safe. Get food, bullets, land, gold, water, booze, smokes, whatever. Whatever you think might trade well when dollars become less and less respected as items of exchange. If nothing else, definitely get some silver or gold but get out of the stock market, get out of treasuries, and start reading www.zerohedge.com
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
The way things look now, yes, you definitely want to pay your debt as slowly as possible. I can't imagine your interest rate being anything close to what inflation will be (or possibly even is now). Savings need to be in commodities and non-dollar denominated assets.
Thanks for the advice guys.
Basically, I should continue to follow my current Budget, no rush on paying down my debts, but do try to make small progress. As far as savings goes, I should avoid my Employer's sponsored retirement plans, I think they may be IRAs or 401(k)s. Instead I should save myself by trying to invest in commodities.
I am not sure on the best way to purchase gold/silver. Would it be sufficient to use an Etrade account to simply invest in ETFs, precious metal mining companies, etc? I came across an article that mentioned a few investment opportunities that seemed to correlate with Peter Schiffs investment strategy. If I am reading correctly, I think I can invest directly into the EuroPAC Hard Asset Fund with a minimum $2,500. While not exactly having hard assests for a barter economy, would this be sufficient enough to protect my wealth?
I really think that it's better to go with the hard assets. I know it's kind of weird to have to have coins in your house as far as security and storage goes, but you have to get rid of dollar denominated assets. ETF's aren't the same as having the coin in your pocket. They are a dollar denominated asset which tracks the price of gold and most of the time are not fully redeemable in physical. I'm pretty sure that most gold ETF's are actually derivatives contracts on golds. So, not solid. Even if your ETF is fully redeemable in physical, you are trusting that the company is going to honor that promise. Chances are you're going to want the physical when everyone else wants their physical, and it won't look good for them.
If you want to trade in the market on gold, junior mining stocks probably aren't a bad idea, but know that you aren't protected. Protection is only in physical assets. Good luck and buy a decent amount of silver. Some useful charts: (shadowstats is a website which produces revised economic measures using older government methods and independently developed ones. This is because over the past half decade the BLS has become adept at concealing the true measures of the economy, inflation in particular.) I encourage you to check out the site (http://shadowstats.com) to judge for yourself whether you think it's legit. In addition I recommend you do a little investigating on a thing called the Boskin Commission and its components: geometric weighting, price substitution, and hedonics.