As the United States and world markets suffer through turmoil, people continue to find ways to protect their investments. The protection comes in usually one of three forms: 1) Investing back into the market, 2) moving money into new investments within the market; 3) withdrawing money from the market. For the people removing money, most try to shield there losses in slow growth funds such as money market or savings accounts. People do not realize that they have an opportunity now to take advantage of this economic situation and the future.

First, people need to understand that the market represents risk of all levels. For example, low risks exist such as CDs, saving accounts, or other guaranteed slow growth accounts. These accounts do not put the owner of the money in a stronger financial position in the long term. Instead, the money often grows slightly faster than inflation, providing limited current risk combined with little future security.

Moderate risk in the market exists, but ultimately offer similar results as the low risk accounts. Investors will often see moderate returns over a lifetime of investing. The investments will often grow ahead of inflation. But such growth acts as a savings account for the holder of the money, not a true means to financial independence.

Finally, high-risk market investments will, for the majority of uninformed investors, fail. High-risk investments, however, also provide the greatest potential for returns. Where someone has the disposable resources, albeit diminished, high-risk provides the best opportunity to invest, if done wisely.

To clarify, high-risk investments do not mean placing money into volatile stocks without care or to invest in the market at all. Instead, these investments include diverging money away from the market and into new businesses.

The current economic market has failed. Investing in the establishment does not make sense for the current investor. True, some of the established blue chips will always survive, but that provides low to medium risk investment. Taking advantage of those stocks will not bring true long-term benefits.

Instead, people need to start investing outside of the market. People need to begin supporting the new wave of businesses forming in America that can exist in the post financial crisis landscape. The new businesses will have flexibility and lower overhead to adapt to demand. They can quickly respond to market shifts and position themselves to take advantage of consumer needs.

The economy will improve in the future. Venture capitalism will help secure a stronger financial market. When it does, people who invested in those new businesses will reap the rewards, while those stuck in the old market will continue to flounder.

Risk will inevitably lead to some loss. The goal of the investor is to have the one gain out grow the combined losses. Thus, wise divestment by individuals can position themselves to benefit from the current market by investing in several options. When the investor succeeds in finding the one successful investment, it should out perform his or her losses.

More importantly, what the economy needs is investment of money and energy. Currently, people have pulled money out of the market and refuse to invest or lend money. These choices only perpetuate the frozen market. Instead, through investment, people will help secure a stronger economy for the future to help not only themselves but also the United States and world economy.

On Tuesday February 17, 2009, President Obama will sign his highly promoted stimulus bill into law.  The hard fought legislation will impact several sectors of the economy including, yet again, Banks, homeowners, and special projects of constituents.  However, the largest unsupported group in the legislation is one of the groups in most need of support: bay area small businesses.

This is not the first time a stimulus package passed Congress in the past year; it is also not the first time small businesses failed to receive legitimate support.  In the 2008 stimulus bill, the only benefit to small business came in the form of increased caps for depreciation under I.R.S. Code, Section 179.  It increased expensing to $250,000 and increased the threshold for reducing the deductions to $800,000.  Most small businesses, however, do not meet these thresholds on a yearly basis.  The Government’s relief was mostly theoretical.

The new stimulus bill does les to aid most small businesses.  Instead, the bill focuses money to specific projects, some genuinely needed, homeowners, and banks.  The bill also focuses on improving the nation’s energy infrastructure.   Because of the “green” energy directive, some small businesses may receive indirect financial support.

Both the current and past stimulus bills reflect the reality of small businesses.  Only increased revenue or small business loans can save businesses.  Sole proprietorships, especially, rely on income to support their businesses and personal lives.  The only true fix to help is an influx of capitol.  For example, tax breaks do not provide any relief when the business could not take advantage of the taxes if does not have sufficient costs or revenue.  Instead, the businesses need customers purchasing goods and services.

In the end, the most important help small businesses can receive will come from the customers in local communities.  In addition, the only way the community can support the businesses is to have the disposable income to purchase goods and services.  The solution must start with the community.

Much of the first stimulus package went to supporting banks and the financial industry.  To date, this has not freed up the frozen capitol in the market and requirements for small business loans remain stringent.  The new stimulus will still focus heavily upon the financial industry, but more importantly will also provide money to states and local government projects.  This additional spending should benefit local businesses.

The projects will require the support of local businesses.  Also, the newly hired workers will spend money further helping small businesses.  In the end, the support given to local communities by the stimulus bill will help small businesses, but only indirectly.

Even though the stimulus bill does leave small businesses in the cold, it will hopefully provide financial support to local customers who will spend money.  If the bill does achieve this, then it will have succeeded, and in the end, that is all small business owners can hope.