And if you’re thinking the recently passed bailout package will smooth the troubled waters… not so fast…

Bailouts And Ballots

The federal government’s “bailout” is merely a patchwork attempt to stop the hemorrhaging. In truth, the well-documented problems still exist - except nobody knows for sure just how deep and widespread the problems are within the system.

What is obvious, though, is that with over $150 trillion in derivatives, troublesome commercial loans, and consumers up to their eyeballs in debt (and tapped out), hundreds of banks worldwide are on the verge of going out of business. And even those financial institutions that aren’t in imminent danger certainly face a precarious future.

On top of that, foreclosures, layoffs, inflation and deflation are all present in different areas, which only exacerbates an already bad situation.

With the U.S. presidential Election Day less than a month away, neither candidate seems sufficiently versed in handling complex issues and must instead rely on their respective advisors.

But with an unsuccessful Democratic Congress over the past 18 months, in addition to an equally ineffective Republican White House, Americans could be forgiven for losing hope. Alas, playing politics with people’s futures always seems to triumph over doing the “right thing.”

Investment Light At The End Of A Dark Tunnel

I realize I’ve painted a pretty bleak picture here. But there’s little point in sugarcoating things: The climate is bleak.

The question is: How do we handle it?

My advice is this:

• The equity portion should be invested in solid stocks that are defensive in nature and which pay a dividend. This should only represent about 10% of your investment portfolio or assets.
• Make sure a portion of your assets is in high-quality municipal bonds (depending on your tax bracket).
• Allocate a sizeable portion of your assets to U.S. Treasuries, U.S. Money Market Treasuries, and CD’s.

Above all, do your homework and find a competent financial advisor or investment advisory service that is both realistic and allows you to protect your money and grow it, too, with the minimum amount of risk.