BigHandleGreen

Energy Myths for the 21st Century

As both the demand and the cost of energy increases, our sources of energy - namely, non-renewable sources such as fossil fuels - keep on decreasing. This dilemma, along with the effects of pollution, rising population, and the resultant global warming has led to a veritable energy shortage throughout the world. Are there any practical solutions to this problem?

There are some suggestions that one solution would be to make further improvements on already existing sources of energy such as nuclear energy. At present, nuclear power supplies only 16% of the world's energy. Certainly a clean source of fuel like nuclear energy can be exploited further, if its harmful effects (radiation) can be controlled.

Our traditional sources of energy - coal, oil, natural gas - are all limited in quantity as they are non-renewable. Further, these sources are very hard on the environment as they emit harmful green house gases that are one of the leading causes of global warming. Unlike these sources, nuclear power is completely emission-free and renewable. Nuclear power plants do not produce any air-pollutants or greenhouse gases.

The Westinghouse Electric Company recently introduced what can be described as the safest and most economically viable nuclear power plant in the world, called the AP1000. This is one of the biggest developments in nuclear energy in years and has given a lot of hope to several nations to finally get access to safe nuclear power.

This reactor, the AP1000, has been based on more than 20 years of research and development by the Westinghouse Company, which has spent countless millions perfecting and improving the major components used in current nuclear plants.

Essentially, the company used the established technology as a starting point, innovating and improving whatever technology already existed to create the world's largest and safest power plant that can offer competitively priced, low polluting power to the world.

This innovation by the Westinghouse Company in the design and production of the AP1000 shows that alongside researching new sources of energy, existing sources should also be perfected to extract the most out of them.
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How the Recession Is Changing Retirement

To recession-proof your retirement income, take these six steps:

1 - Pick a retirement income strategy that is not tied to market fluctuations

There are plenty of calculators available to design your retirement income strategy. But beware! Not all are designed to be in your best interest. A lot of them are geared towards the investment vehicle the site is selling. A great number of retirement income planning calculators make the mistake of trying to predict the future; we know how dangerous that game can be. Some are just unaware that they are tying you to market fluctuations, even if you don't want to. Be certain to pick the strategy that best suits your situation. You should be looking for the lowest rate of return needed, combined with the greatest investment flexibility.

2 - Put strategies ahead of investments

Too many times investors go for an investment they think is worthwhile, or one that is 'hot'. But many times that 'hot' investment or worthwhile investment doesn't fit into their retirement income strategy. For example, if you are living on interest gleaned from bank CDs, would you sell them all and put your savings into just one stock? I don't think so.

3 - Align your investments to your income strategy

Once you pick your income strategy, you can pick the investments that align to that type of strategy. Just as in the previous example, if you picked a strategy that was an all fixed 'income investments' strategy, you wouldn't be out hunting for stocks. If you find you are, then you might be in the wrong strategy.

4 - Budget your annual income to a level monthly number, especially if you are paid on a commission basis or get paid bonuses.

In order to match up income and expenses, budget your funds to last throughout the year. This will make it much easier month to month, and especially at the end of the year to make sure your income exceeds your expenses. Commissions, bonuses, even part-time salary paid in uneven increments (such as consulting income), need to be annualized (how much is this a year), and then divided by 12 to make it monthly.

5 - Estimate expenses on a level basis (such as your income), and match them up.

Once you have an idea of your monthly income, match up the expenses and make sure you are exceeding your expenses with your income. Many utilities offer a budget billing plan, and many other expenses can have the billing changed to a specific day of the month to keep them all in step.

6 - Stay ahead of inflation by avoiding low to no rate of return accounts. You can have safety and an inflation-beating return.

Market's up. Market's down. Market's down again. Now it's up. You get the point. Times are a bit uncertain, but aren't they always? When the markets are taking off, you start wondering when they will stop, and when they are going poorly, you wonder when they will turn around. Safety is good. When you are going for safe, you can look for the highest yielding investment with safety without going for a 0% rate of return account. But with the most diverse income strategies, there should be a growth component. And you never know when things will turn around, so don't be so quick to completely jump ship from your long-term plans. Many of these plans, and growth components in income strategies, are built for the long haul and already assume market volatility and uncertainty. Just make sure you review and rebalance at least once a year.

Beware the Current Bull Market in Derivatives

In the last 30 years the trend has continued with ever increasing complexity. Options on Futures by the early 1980's, followed by over-the-counter swaps and options in the mid 1980's and continuing with credit derivatives in the 1990's and insurance derivatives in the early 2000's.

What began as a simple means of hedging the price of corn has become a global market that trades trillions of dollars per day. The interactions and correlations between markets that were once considered separate are today closely connected,with price shocks rippling from one market to another. The development of computer systems has been the single most important "enzyme" without which it would simply not have been possible for markets to grow.

Ironically, it is now the inability of computer systems for risk management to keep pace with the markets that is holding back further development. The IT systems landscape within most investment banks is now highly complex with many different systems interacting in ways that are difficult for a human being to understand. Armies of software specialists and consultants maintain fragile systems; "if it ain't broke don't fix it" being the mantra of many. But a nest of vipers lies hidden, a tangled web of fragmented and fragile interconnections that means trading firms are vulnerable to substantial losses due to potential system failures. Operational risk within IT systems has the potential to bring about collapse of the entire firm. The time has come for many banks to face up to this problem and tackle it at the grass roots level. Instead of adding more and more patches onto existing systems, radical investment is needed to clean up and bring a structured, well architected systems landscape into being.