Do you have goals?
I grew up in a house that was goal oriented. At a very young age I learned that I needed to set goals and figure out strategies to attain them. When I entered the financial industry, it blew my mind by the number of clients I met with who never made any goals.
If you don’t set financial goals, then how do you know where you are going? For example, if you want to buy a house, then you should be setting a goal that has a date you want to buy the house by and an amount of money you will need in order to buy the house. Once you have your goal, then you can work on a strategy on how to obtain that goal such as how much you should put away each month, what you should invest the money in, etc.
There are lots of things that we want for our lives. Maybe for you it’s paying for your child’s wedding someday, or paying for your children to go to college, or maybe it’s having a retirement where you can travel often.
Whatever your dreams are, they aren’t going to be met if you don’t set some goals. Once goals are established, it’s important to review your goal and see if your goal is still important to you. It’s ok to change your goal – remember, you are the one to determine that! The important thing is you have a goal and you are working towards it!
Before You Retire
If you are considering retiring, you might want to start interviewing financial advisors. Retirees often come to me a few years into their retirement not understanding their current expenses, debts owed, the pension elections they choose, or how much they can withdraw from their accounts. Mistakes that have lifetime consequences have often been made that leave little room for repair.
Although it is never too early to start working with a financial advisor, 5 years before you want to retire is critical. Budgets should be reviewed or created if one doesn’t already exist, changes implemented, and goals defined. Debts should be looked at and debt reduction strategies should be put into place. Your current investment allocation should be closely looked at to determine if the risk level is appropriate for your goals and future income needs.
A lack of planning often creates a situation where the retiree is in serious risk of outliving their income, or needs to reduce their standard of living in order to not outlive their income. The result is a retirement that isn’t what the retiree envisioned for their life.
The bottom line – if you want to someday retire, the sooner you start planning the more realistic retirement will be.
All Over Town
You’re diversified…you have advisors all over town! Or, you have 100 different mutual funds! Sorry to break the news to you but that isn’t how it works!
Just because you have accounts all over the place doesn’t mean that you are diversified. The only way you can truly tell if you are diversified is when you look at your portfolio in a whole and assess which companies you own, including looking at your mutual funds and seeing which funds overlap in their holdings.
If you have several advisors then you need to inform each advisor about what you own outside of the investments you own with them. If they aren’t asking you, then shame on them. In order for your advisors to properly recommend investments, they should be aware of what you already own in order to reduce your risk by increasing your diversification.
If you don’t feel comfortable telling your financial advisor what you own, then you shouldn’t be buying from them. It’s like going to see your doctor – if you don’t tell your doctor all your symptoms, then they can’t accurately help you. If you don’t feel comfortable with your doctor, then it’s probably time to find a new one.
So, unless you know the intricacies of everything you own, you may want to find an advisor that you trust so you can consolidate your accounts and ensure your diversification. At the very least, handing your advisors a list of the investments you own and any changes that occur is smart.
You're a Super Star!
You may be a super star at your investments. You may understand P/E ratio’s PEG’s, and dividends. You may understand everything there is to know about the market. However, does your spouse?
Think about this. If you know it all, that’s great! But if your spouse doesn’t understand the investment world either because they just don’t, or they don’t care to, what happens if something happens to you? Do you really want your spouse to have to handle your financial situation for the first time ever when they have no financial advisor that they trust?
Think about this. Do you want to put your spouse in a position where they are already stressed out, mourning, and scared, have to find someone to help them? Do you want to put them into a position where they may possibly choose the wrong advisor, or make the wrong financial decisions because of a lack of guidance, all because YOU understand what you are doing?
If you truly think about it, it doesn’t make sense. It’s also unfair.
So, if you understand what’s going on in the market, great! If you want to protect your loved one’s in the event something happens to you, then come talk to me. I can show you how it’s possible to work with an advisor and still have control over your money!
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