Facing Geopolitical Risk

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Today, we will discuss the geopolitical events of the past and present. Geopolitical risk is nothing new, but will current conflicts significantly impact the economy?

On today’s episode of, Your Money & Your Life, we discuss geopolitical risk and how it could possibly impact the economy and your retirement plan. With inflation, war, and COVID regulations changing things are moving quickly in today’s climate. So, we are here to help put some perspective on these issues and make some sense of what we’re seeing out in the world.

What’s happening in Ukraine has been simmering since the fall of the Soviet Union. Conflicts have been flaring up since the mid-1990s and certainly within the Putin era. The current turmoil we are seeing is nothing like we’ve seen since World War II though.

Geopolitical risk in the economy is nothing new. There are a lot of different types of risk we face as investors but the past few years have been relatively stable despite the pandemic. Will this conflict change things?

As much as we’d like to, we can’t avoid risk. Worldwide political impacts inflationary risk, liquidity risk, currency risk, company risk, and pandemic risk. Putting this conflict into perspective by looking at past geopolitical events like the Cuban Missile Crisis and the Korean War, we see these issues affect the market but the economy inevitably recovers. We’ve had 26 corrections alone since World War II.

Many remember the 70s as a time of rising energy prices and we are facing a similar crisis now with skyrocketing gas prices. Along with rising interest rates and various other issues we saw in the 70s and 80s came the rise of four megatrends: the rise of China, the start of the European Union, globalization, and the rise of the Taliban and wars in the middle east.

As you can see, we’ve been navigating geopolitical events throughout history. While we can’t tell the future and how the Russian-Ukrainian conflict will turn out, we can assume that energy prices will continue to go up at least in the short term. Not every company and stock will be affected equally though. What we can’t do is react to the news and the events of the day emotionally. Don’t time the market, go off of recent track records or pick individual stocks that are speculative. Protecting yourself always comes back to the importance of diversification.

If you have any questions for Don reach out at (732) 784-2867 or don@doncash.com.

Listen to the full episode to learn more or skip around to certain topics.

[0:30] Things change quickly

[2:05] Keeping perspective

[3:16] Ukraine and Russia history

[3:56] Ukraine wanting to join NATO

[6:00] Different types of risk

[8:37] Geopolitical risk in perspective

[10:46] 26 market corrections since WWII

[13:14] Gas prices throughout history

[15:28] Four mega trends

[17:46] What can we expect to see?

[20:29] Not everything is affected equally

[22:20] What is the ‘solution’?

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Donald W. Cash – CPA, CFP®, is an independent advisor. After graduating from Rutgers University, he began his career in 1985 as an accountant. In 1990, he entered the field of Estate Planning, concentrating on long-term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs.

Don advocates for a holistic approach to Estate and Financial Planning and has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers.

He is married to Cathy and they have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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