How Europe’s Woes Influence Investment Decisions

We believe Europe needs fiscal austerity to maintain their amount of debt; however some vocal Europeans have said they do not want such austerity measures. They want to continue to retire at 50 and receive 90% of their pay from the government.  The drama has been playing out for nearly three years. It is very likely that the stronger countries will grow tired of carrying the weaker nations. We believe that Greece will return to the drachma. We do not see Germany, who suffered their own turmoil when West Germany absorbed East Germany’s debt, continuing to bail out Greece. Most investors have been waiting on the fall of Greece for several years now, and we believe it is merely a matter of time.

With such turmoil in Europe, investors are seeking safety by turning to U.S. Treasury bonds, which has driven interest rates to incredible lows. We recommend avoiding Treasury bonds unless it is for the short term. Locking money into bonds for the long-term will likely be detrimental when interest rates rise. We recommend investing in high quality U.S. stocks. We feel it is the best place to find a healthy return on investment, without incurring unnecessary risk. We continuously see investors moving from stock funds to invest in bond funds, and this bewilders us. With no maturity date and anemic returns, we do not believe the investment will achieve what investors are seeking.

We avoid hedge funds and private equity, as there is not enough transparency in the investments to understand how money is made. We we are unwilling to take that risk. If you have the wherewithal to do so, real estate could be a solid investment. However, with real estate, you have to be able to put in the work to manage the properties. Buying homes and renting them can be a solid business right now.

At Henssler Financial we believe you should Live Ready, which includes understanding the influence the world economy has on your investments. If you have questions on your investments, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com. 

Disclosures

This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing.