What Do We Tell the Gen X Folks ?

Gen X families with kids, bills, mortgages and limited real job security are hunkering down- At least they should be. They worry about whether they can pay the mortgage or the rent; have the money to provide life insurance to protect their family's future in the event they die; whether the two wheezing autos will make it through the coming Winter; whether that cough they've developed will eventually become a disability issue, or whether Jenny will need those braces this year after all and how much the oil bils will be this Winter.

Like many, they have tried to save and didn't go for the new Abominator sports ute, the Amazaphone that does everything but the laundry, nor the 50" LED boob tube as so many others did. They were watching their budgets, not going out much, working in their garden to reduce costs and hoping the savings they were able to put away would amount to something.

Many are teachers, state workers, small business owners and municipal employees all fearing that their jobs or businesses could disappear next week. They represent typical American families.

What could, should they have done differently over the last 10, 15, 25 years?

Many would say that investing in the capital markets would have produced significant gain, that the growth in assets would result in a comfortable retirement. Others would have said buy a home and watch it appreciate in value. Some said invest in a small business and keep it growing. Some even bought life insurance and watched the guaranteed 4.5% interest rates grow their cash values. An interesting fact- The S&P Index is at almost the same level it was at 10 years ago- The S&P represents about 75% of the value of invest-able equities in the country.

We can probably assume that the concerned families- The ones that worried about their and their families' future probably tried to do all the right stuff. Unfortunately our government is forever in a recurring dream kind of problem and needed to do what they could to minimize recessions, keep everyone working and engage in a few wars as well. They had to do this for years and years and as a resulting necessity the obligations that government has to its people and the rest of the world are watered down through the US financial printing press. When they needed a few bucks they tossed the then self-sustaining Social Security fund into the general treasury bucket.

As to the saver, a retiring person or someone else on a fixed income, their savings, investments, pension expectations and Social Security were decimated by an ever increasing dilution of the Greenback. While the printing presses roll on the US dollar is shrinking to less comparative value every day with no sign of improvement on the horizon.

Every administration for the last 40 years watched as we imported more oil every year and did nothing to develop an energy policy. Congress was and still is interested only in getting reelected so an energy policy wasn't in their best interests.

So, what do we suggest to our Gen X families?

Since growth in the US will be minimal at best for the foreseeable future while inflation will necessarily increase, foreign markets probably offer the best opportunities. Emerging markets like the "BRIC" countries- Brazil, Russia, India and China as well as somewhat smaller emerging countries like Indonesia, Singapore, Chile and New Zealand contain many solid opportunities without total dependence on exports for their GDP. These countries see continuing growth.

Developed countries like Canada, Norway, Australia and Mexico all have assets that should be in demand even though the countries importing these products will drop somewhat.

Currencies like the Swiss Franc and Norwegian Krone are as solid as they can be due to their lack of encumbering debt and higher interest rates. Canadian bonds and bank interest rates are also attractive.

Many commentators suggested long tern investment in stock funds. They are correct with some caveats going forward. A fund or group of funds that contains some debt- Emerging Market debt is the best opportunity as are Emerging Market stocks. Buying Canadian dollars or buying Canadian issued bonds or certificates is not a bad plan either. The EURO mess is far from decided and there are most likely some bedbugs under the covers that discourages investment in EURO countries right now. The afore mentioned BRIC countries should be considered, though. Many ETFs and index funds exist for these.

What about gold and silver? Some people with long term savvy suggest that gold and silver will be a natural offset to the obviously looming inflation. Right now gold- Either in hard form or gold index (GLD) or silver index (SLV) is probably a good idea but be careful of volatility. Many experts see gold going to at least $2000- But not in a straight line.

Savings is the sticky issue. Should putting money in a savings account be encouraged? CDs? Money Market funds? US Treasuries? Unfortunately all of these equate to automatic confiscation of one's assets. The interest income doesn't come close to overcoming inflation, and US Treasuries will drop severely in value should interest rates move up even a little.

To those that qualify for mortgages or have some money available income real estate in the US may be attractive. Many folks are buying two and four unit buildings and plan to live in them. Just try to ascertain that they have reached their price low point in the housing markets downward spiral.

For those looking for an epiphany, sorry, no short answers here- Hunkering down is the rule of the day until the world gets itself back in order.

Good luck!