According to a recent report on the legendary investor, Warren Buffet, it’s time to purchase stock in American companies. The method behind what might seem like a bout of madness for the aging investor is that when the total market value of US stocks drops to a level between 70%-80% of American Gross National Product, it’s time to buy. 

Buffet’s fantastic success as an investor is based, in part, on his practice of seeking out undervalued companies to invest in. He soon moved from turning over a profit through stocks in a company to purchasing undervalued companies and bringing the most-successful ones together into the Berkshire-Hathaway brand. But purchasing a struggling company is well out of the average investor’s financial reach. The only remaining option is to purchase a portion of that company as stock. 

It could well be said that nearly every company in the US that has the resources to continue operations is currently undervalued. With the total value of the stock market reaching the 76% mark at best, perhaps Buffet is right and its time to pull some money from under that mattress and invest it. 

Perhaps it comes down to a matter of faith. Once you decide whether or not you believe the economy will recover, the question of investing gains simplicity. If you cannot afford to lose a dime, then just like always, you should keep your money in a safe place and not worry about the stock market. However, if you have some cash on hand and want to research the possibility of creating genuine long-term wealth, it’s a great time to check out the stock market.  photo credit: ArtemFinland

Unless you live under a rock that you are no longer making payments on, you’ve heard about government efforts to revitalize the American economy. As Sarah Palin said so eloquently, “we need to shore up the economy”. As reported by Forbes, the US Senate has approved a tentative $780 Billion stimulus package that must find common ground with the larger US House package. Both proposals use a combination of government funding and tax cuts to promote a new flow of money in the American economy. 

To break it down into simple terms: A similar plan implemented in your personal finances would attempt to solve your money problems by reducing your income and increasing your debt. You could do this by working less and making up for that lack of income by paying for more of your daily needs with a credit card.

That plan wouldn’t make any sense to you unless you happened to be self-employed without insurance and needed to take time off in order to heal up from a work-related injury. In that situation, it makes sense to reduce your income and increase your debt so that you can guarantee that you’ll be able to eventually return to work. 

It’s easy to hear the numbers being thrown around about the current stimulus package and make sweeping judgements about what will or will not work. It’s much harder to find multiple perspectives on a particular situation before forming an opinion. Taking the time to research current events, finance solutions, and ways to save money will not only enable you to make better decisions for yourself, but to influence others to make smart money choices. photo credit: Phil Romans