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Investor s are really negative (blue line), but in being so frustrated by the stock market they have largely done nothing (black line), but left their money full invested in equities. Why? I'd suggest that TINA is still in charge, but TARA is going to have her day soon!

The concepts of TINA (there is no alternative) and TARA (there is a reasonable alternative) have been at the center of a heated discussion about how to approach difficult financial choices as each has a significant impact on our national economy. I'd suggest to you that they have more practical impacts on your daily investing and wealth creation.

The traditional “TINA” and "TARA" dilemmas have been used to justify bank bailouts, quashing of competition, and the creation of monopolies. They have also been used to explain why some people are stuck in bad investments with no immediate alternatives.

On the other hand, TARA has been used to motivate people to seek out better investments and create more diversification in their portfolios. It encourages investors to look for alternative investment opportunities that may provide better returns or lower risks than traditional investments.

Ultimately, both concepts are important when it comes to investing and wealth creation. TINA can help you understand why certain financial choices may be necessary in order to protect your capital and maintain financial stability. On the other hand, TARA can help you explore different options that may provide higher returns or a more secure future.

I want to make sure you are considering how TINA and TARA impact your current investment opportunities and those of your clients.

TINA has lead most of us to take on more risk to get higher returns. Do I accept .005% in my checking and savings accounts with little to no risk, or do I invest in the stock market for an 8-10% return with the risk of losing 20% in a down year? This is TINA.

What about TARA? Are you aware that money market funds are closing in on 4.5%, with expectations they'll be over 5% by the end of the first quarter? What happens to investors when they start to realize that they can get 4-5% risk-free? Money in the stock market will flow back into these higher risk-free alternatives and that could impose more gravity on stock prices.

Do you still have cash sitting around in checking and savings accounts earning less than 4.25%?

SWVXX - a Schwab Money Market fund is paying 4.27% today as one example.

There are other implications to this we'll discuss. While mortgage rates have gone up, the yield on investments has also gone up. If you have $100,000 you want to borrow, and you have to borrow at 6% that's the rate. The issue of it being 3% a year ago is irrelevant - apart from the psychological impact. That said, the same $100,000 would have gotten you .25% in your money market and you can now earn 4.25%, so the real return has gone up 4% on cash just as rates to borrow have gone up.

TIP: Learning how to discuss this can help clients overcome the psychological inertia of higher rates being SO negative.

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