Is Impatience Killing the American Dream?

Long ago, many of our parents and grandparents gave us this advice: "Go to school, get a good education, then find a stable job with a secure company that pays for benefits such as a pension, insurance, and vacation time. Buy a home, raise a family, and work diligently until you turn 62 and then you'll be able to enjoy your golden years." This became recognized to millions as the American Dream and generations of early adults aspired to build this ideal within their lives. Unfortunately, difficult economic circumstances have thwarted this notion for many, but too often we have become our own worst enemies as a product of poor financial decisions and a mentality of "gotta have it now". Proper wealth management has taken a back seat.

The most recent thirty years have seen one generation, and perhaps now a second, cultivate what my parents used to christen "champagne taste on a beer budget" as luxurious wants began to take the place of bona fide needs. Rather than saving to buy a house, it was done with no money down, instead of buying a car within the family means and budget, new financing permitted for longer loan terms and leasing, and when putting money away for that proverbial rainy day should have been priority one, many opted instead for vacations, designer clothing, lavish meals, and spending with not much or no foresight to the future. Credit cards were maxed out and home equity was drained until one day factors beyond their control cried out "No Mas!" as hundreds of corporations, financial markets, and banking institutions crumbled while the few economic survivors tightened their belts and trimmed the fat. Almost instantly, job security disappeared, pensions and retirement accounts vanished, and buying with credit became meaner than eight seconds on a Brahma Bull. Yes, we may choose to point our fingers at the banks or the government or the car makers but the reality of our demise is greed and impatience that spurred the attitude of instant gratification and left us with a sense of entitlement for the American Dream before we had sincerely paid the price. And while scores of Americans did not give in to this attitude of abundance, the fallout has been realized by all with few, if any, escaping unscathed.

So now what do we do?

For many, it is time to start over from the ground up and, unfortunately for many employees, pensions have become all but extinct and each individual must assume the responsibility for their own retirement account. The risk here is that most are not equipped with the financial knowledge needed to adequately plan and manage this task. Add to this the detail that financial products have greatly increased in complexity and the average employee finds themselves rowing upstream without a paddle. For these people, proper guidance and education is needed to get back on the right track and reestablish some vision for the future. Working with the proper financial advisor to securely map out a wealth management plan is step one in the process. Adhering to a budget, clearly defining wants vs. needs, paying off debt, and structuring a retirement portfolio are critical.

But what about people who refrained from the unwarranted spending and still have portfolios in good shape?

We're most likely talking about baby boomers and those nearing retirement in this category and for you, defending your assets and avoiding any would-be future market slides is clearly the best strategy. You've seen now how staying the straight-and-narrow course doesn't protect you completely when the world surrounding you is crashing, but active portfolio management with an experienced financial planner helps you to steer clear of the bottoms of the market's peaks and valleys. Statistics show that in the past 25 years (1984-2009) avoiding the worst days in the market are far more important than hitting the best days. Since "buy and hold" doesn't help you to miss these black market days, active portfolio management with a qualified professional will often outperform the indexes.

Regardless of your current circumstances, you can still achieve the American Dream and generate a bright future and comfortable retirement. The key will be receiving the right investment counsel from the right people and then developing the right attitude.


Learn more about active portfolio management and its benefits by contacting John Dubots, Temecula financial advisor, with Dubots Capital Management. Dubots has over two decades in the industry and will provide a free consultation to answer all of your portfolio management questions.