Create Your Own Financial Recovery

Reposition yourself. Explore growth industries that offer employment opportunities, such as healthcare. Also, adopt a global perspective. Search for opportunities outside the U.S. by joining a global leadership or international professional organization. Attend an international summit, serve on a panel, or conduct a seminar related to your field overseas.

Consumer Savings and Investments
The bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than on the wealth of whites, according to the Pew Research Center. A recent study showed that from 2005 to 2009, inflation-adjusted median wealth fell by 53% among black households, compared with a drop of just 16% among white households.

As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009; the typical white household had $113,149. Moreover, about 35% of black households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 29% for blacks and 11% for whites.

In spite of short-term losses, you must think long term when it comes to saving and investing for your family’s future, experts say. “The market is more likely to see double-digit returns over the next decade or so rather than single-digit growth or especially a negative return,” says Mellody Hobson, president of Ariel Investments L.L.C. (No. 6 on the be asset managers list with $5.47 billion in assets under management—see “You Can’t Predict the Future,” Money, this issue).

Joshua Shapiro, chief economist at MFR Inc. in New York, says that it’s critical for families to continue to pay down their debts and get their balance sheets in order. Much progress has been made on that front and is likely to continue for 2012. Shapiro believes a lot of that behavior is going to be shaped by the strength of the U.S. labor market recovery.

Also a concern is how fast Europe can respond to fixing problems with its debt crisis and avoid falling into a major recession. He says a key factor will be how Germany, France, and the European Central Bank team up to repair Europe’s problems in the months to come.

Suggestions for increasing savings and investing in financial markets:
Track your monthly spending and net income, and transfer any surplus into savings at the month’s end.
Focus on shoring up your emergency funds in this environment as well as creating reserves for investment opportunities.

Take a contrarian view and invest for the long term. Look for value in U.S. stocks, particularly those with valuations that offer a bargain investment, given the volatile market.

Consider diversifying your portfolio beyond U.S. stocks and stocks from emerging markets. Also weigh other asset classes such as commercial real estate, corporate bonds, and inflation-linked bonds.

Invest in stocks that make products people need. Also consider companies that pay solid dividends regardless of economic conditions, such as consumer staples and consumer durables.

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