Jessica Harmon

Money in 2012

This article looks at the state of American finances through the coming year. There are many different experts who all have different things to say about finances in 2012 which is why it is best to speak with local financial advisers to get advice for the New Year.

With the New Year in, people are starting to think about how their finances may be shaped by critical events occurring worldwide in 2012. There are several major elections coming up not just in the United States but abroad as well. There is also much fret over the European debt crisis as well as Europe’s reliance on a single currency. People are unsure of what to think when it comes to finances in 2012.

But just because the outlook seems bleak doesn’t mean that it will be. Just last year the projections for the year’s fiscal landscape wound up being vastly different from what actually happened. Financial analysts believed at the beginning of last year that the United States would likely see some economic recovery. Economists were projecting growth and there was vast improvement in consumer confidence. In actuality however the economy did not grow as projected and consumer confidence waned as the year progressed.

But 2012 is not 2011. The New Year should at least bring forth different financial projections than last year. For one thing the U.S.’s downsized credit rating from Standard & Poor’s took a toll on the markets last year, but not in the way people might think. When it was announced that the United States’ credit rating had taken a hit people rushed out to buy stock in the treasury, which was the exact thing that had just decreased in value. But financial analysts believe that people want to think that treasuries are safe, they just feel like they should be. These analysts believe the best thing to do now would be to exercise prudence when making stock decisions over the coming year. According to some experts it may be best to wait and see what the year brings before looking at stocks. Others feel that waiting will cause people to miss out on opportunities.

Daniel Egan, head of behavioral finance for the Americas at Barclays Wealth said that “This is the worst kind of environment to attempt market timing in. Odds are, you’ll miss the rally when one or more uncertainties — euro, U.S. fiscal policy, U.S. election — resolves itself, leaving you with the volatility but not the return you’d hoped for.”

But the problems with Standard & Poor’s are not the only things that need to be looked at as we move in to 2012. Analysts believe that people who have recently lost money in certain types of investments will be more likely to mistrust that form of investment as a whole in the future. But doing so could cause consumers to miss out on excellent investment opportunities. “Individuals who got burned by T-bills in the 1970s and were burned by inflation underweighted T-bills the rest of their lives,” Mr. Egan said. “2008 being a credit crisis, people are going to have an experiential prejudice against banks for the losses they experienced.”

Though these ideas do come from experts, it can be difficult to know which experts to believe. One expert will say one thing about the year’s financesand others may say the exact opposite. With such conflicting information out there it can often be difficult to know what to follow. That’s why it’s always a good idea to invest in financial planning. Talking to local experts who are able to build a relationship with you and understand your personal financial needs on an individual level can make all the difference in the world when it comes to making sure you make the right decisions for your financial future.

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