PHOENIX (3TV/CBS 5) — What’s happening in Ukraine could affect our wallets here in the states. The markets are already taking us on a wild ride, and this situation has the potential to impact our economy and your personal investments.
“The European Union is one of the biggest economic blocks on the entire planet that could potentially be drawn into a broader conflict, and Russia is a big energy supplier to the European Union,” said Certified Financial Planner and Certified Investment Management Analyst Brent Mekosh. “The idea you could bring that economy offline or at least significantly disrupt it has impact for the entire global economy.”
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He said if the conflict spills outside the borders of Ukraine, we could see interruptions here in the U.S. with trade, business, supply chains, and even communication.
“If we’re in a situation where economic development is interrupted for a long period of time, companies are not going to make as much money, and the stock market does well when companies make money,” said Mekosh. Mekosh is getting many questions from clients asking how it will affect their money. “When you start talking about a war and bombs being dropped and things like that, that’s really going to impact people’s emotions for sure.”
He said history shows when big events like this happen, the stock market sees dips, and we’re already seeing a lot of volatility. You could see your 401k impacted.
Ukrainian officials said their forces were battling Russians on a multiple fronts, and had lost control of the decommissioned Chernobyl nuclear power plant, scene of the world’s worst nuclear disaster.
“People probably won’t love their statement when they open them next month for sure,” said Mekosh. “We’ve already been in a market correction, and this today, for sure, exasperated the decline.” It’s not all bad news for your money. “In most of the cases, the markets do bounce back. Sometimes it’s a couple of months. Sometimes it’s four months. Sometimes it’s six months. Sometimes it can be a little bit longer.”
He believes Russia wants Ukraine for its rich soil and ample supply of neon, which makes microchips found in cell phones, computers, and even your car.
“25% of their soil is the best soil on the planet to farm in,” Mekosh said. “They’ve got rare earth…90% of the supply of neon used to basically make microchips and processors. What are we having a problem with? A chip shortage. We’re having a problem getting semiconductors, getting processors that we need. Russia wants a warm water port. They want to be able to send their ships out.”
Mekosh believes the conflict could even have an impact on our housing market. He said interest rates could be lowered, and the cost of building a house could go up.
“You got to buy wood,” said Mekosh. “You got to move it here. All the stuff that needs to be made in factories, all that takes energy, so if you spike up the cost of energy, you increase that input cost. Then you’re adding expense to building a house.”
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