The Bottom Line

You Can’t Save Everything

 Volume III Issue VI – Tuesday June 26, 2007

A monthly newsletter of financial commentary for our friends

 The economy really slowed down in the 1^st quarter of 2007. Taking a look back in the rear view mirror, we saw that the Gross Domestic Product (which is a major gauge of economic activity) was up a meager .6%. That is the lowest reading in 4 years. This begs the question: Is this a pause in a healthy economy or a turning point? This is old news, since we are about to wrap up the 2^nd quarter in just a few days. We prefer to make investment and management decisions blending yesterday, today, and tomorrow’s news. We know it is important to be aware of what is in the rear view mirror, but you drive looking out the windshield.

 Our local West TN real estate market is holding up okay. In Madison County, we find that total home sales are tracking about where they were last year. However, there is no doubt that new construction is slowing with building permits and new home sales below where they were last year. Mortgage rates have crept up in the last two weeks. If they stay up, that will tighten the noose a little bit more on the local real estate market. So the news is not bad on this front, but it’s not particularly good either. Just be thankful you don’t live in Florida. The news in certain spots there is not nearly that good.

 We believe that Walgreens is on the front end of a new trend to come. They are beginning to put retail health clinics in their pharmacies. In a world where health care costs climb and so does the number of uninsured, low cost clinics in retail establishments might be very appealing. They might be staffed by a nurse practitioner, and their services would be basic in nature. This could be a very cheap, viable option for the occasional sore throat, stomach bug, etc. If it works, it would not surprise us if Wal-Mart hops on the wagon as well. With the tremendous traffic in their stores, they are looking for new ways to monetize it. They’ve tried retail eye clinics already. It would not be difficult to expand that to basic healthcare services. We think this will be a trend to watch as baby boomers age in this evolving (and burdened) health care industry.

 How much money do you save as a percentage of your gross income? The nationwide averages tell us that Americans have spent 110% of their income over the last 24 months. That is what we call a negative savings rate. We are spending more than we are making. This is yet another area that China has us beat. The Wall Street Journal Reports that China has a 25% savings rate. Wow! We like to suggest to our clients that they save 10-25% of their income on a monthly basis. Imagine what you could do, if you were able to put off the enjoyment of those dollars for a few years. Remember, a dollar saved today, might double within the next 10 years. That means that doing without today might mean you can do doubly or triply a little ways down the road.

 For all you quarter collectors, the Idaho Quarter was released this month. Founded in 1890, Idaho in one of five states’ quarters scheduled for release in 2007. As a closing thought we would urge you to remember that you can save quarters (money), but you can’t save time. That is the one commodity that we can’t create more of. In a world that tells us busy is better, use it wisely. 

Chad P. Wilson, CFP

Foundation Bank – a division of McKenzie Banking Company - 731-554-2423          

The above is strictly informational commentary and does not constitute any sort of recommendation. Consult the services of a confident professional for specific loan, investment, tax, or other financial advice