There has been a good deal of talk recently regarding Greece and its financial situation. Will the country decouple from the Euro? Will they accept another bailout deal? Of course, this has littered our newspapers and news headlines…and to the point of concern for many.
After a recent vote, The Greek people voted “no” to additional austerity measures proposed by their creditors (the folks who bailed them out the first time). Many of the Greek voters are fed up with their current situation and would like to shift from the Euro back to the Drachma.
How does all of this impact you?
While this current Greek crisis may incite some short term instability the market, the overall impact should be relatively minor. Janet Yellen has stated that the Fed is still on track for an interest rate hike later this year, so the Fed doesn’t seem too worried…so, I’m certainly not. The good news is the Euro could be driven down further, which is exciting if you plan to travel overseas anytime soon. You’ll be able to take advantage of favorable exchange rates!
As with similar issues in the past, this too shall pass. While I don’t intend to diminish the importance of this issue for Greece, I would like to provide a bit of perspective. Most folks are worried about how this may impact the stock market. Here’s an interesting statistic: Greece’s share of the world equity market is $28B. For comparison, Apple’s equity footprint is $643B, while the U.S.’s equity capitalization is $24,478B…yes, that’s billion with a B!
In percentage terms the U.S. holds 52% of the world’s share. Greece on the other hand holds less than one tenth of one percent! By the way, this information is from year-end 2014 and from my friends at over at Dimensional Fund Advisors (DFA).
So, okay, I also understand that this could have a ripple effect throughout the rest of Europe and then possibly over here to the States. Sure, we could see some volatility…but this too shall pass. But there are also a myriad of other issues that could just as easily derail our country’s economic growth.
If you want to be proactive and try to stay one step ahead of Grexit (this is the new hybrid term which combines Greece and exit), my suggestion would be to focus on what you can control. Control how much you spend, how much you save, and how much you pay in taxes. I don’t have a direct line to Alexis Tsipras (The Greek Prime Minister) and can’t control the outcome, but I can control the items mentioned above, which are three of the best ways to growth wealth. To take this further, If you want to focus on something that really matters, focus on how you would like to enjoy the rest of your summer!