5 Things Every Investor Can Do Now
By John J. Sklenar, CPA/PFS, CFP 
[2010]
We
have had two crashes in the last decade and the trust temperature of
business these days is hovering somewhere below zero. So what’s
an investor to do? If you’re like most people, you’ve probably
had enough. Perhaps you’ve even found yourself frozen with fear. Below
are five things every investor can do right now to immediately take
control of their finances:
1. Map Out A Financial Plan
- Now more than ever, everyone needs a formal financial plan; Not a
stockbroker, not a salesperson, but a written financial plan.
Usually, you get this by hiring a Certified Financial Planner ™
although there are other good planners out there who are not
certified. In your plan, you should discuss your goals, dreams,
feelings, financial condition and investment performance, and how
they’ve changed over the course of the past year. Any professional CFP
is qualified to help you through these uncertain times. He can
help you evaluate your circumstances and map out a complete plan for
meeting your goals in today’s uncertain financial and economic
environment.
2. Evaluate Your Current Portfolio
- Now is not the time to shoot yourself in the foot. As difficult
as it might be, now is the time to know exactly what you own and how
it’s performing. Only then can you determine if it still fits
your plan above. Look at your time horizon for investing.
Do you still have five years or more to leave your money in the market
until retirement? Has your target date for retirement
changed? What degree of safety do you require? What, if anything,
should you buy, hold or sell now, given the current volatility in the
markets and economy? Once retired, which accounts should you draw
from first for income? Also, for those who have lost some principal in
this down market, is there a better, faster way to recover with less
risk and/or more return?
3. Adjust Your Spending Plan
- It’s amazing what you can do when you know what needs to be
done. One couple reduced their spending from $114,000 last year
to $50,000 this year. That’s a 56% difference, and this couple
claims that, while they definitely see a difference in lifestyle, they
feel much better knowing they’ve taken back control and are now living
within their means. The rule here is: Avoid dipping into your
principal if at all possible.
4. Use All Available Tax Reducing Strategies
- Every dime we can save you in taxes goes right into your
pocket. It all starts with being organized and good
record-keeping. The first step in managing anything is to become
aware, and taxes are no different. Take all your deductions and
available credits. The IRS changes these almost every year.
In addition, you can save taxes by setting up the proper investment
accounts for the money you’ve already put aside. You
may even find you qualify for more than one type of retirement
account. For example, you may be eligible for a 401k or 403b AND
a traditional or Roth IRA. Now is the time to start your tax
planning for next year.
5. Confirm Your Estate Plan
- An estate plan is simply legal documents enabling you to leave what
you want, to whom you want, when you want with a minimum of taxes and
maximum control. Just as everyone should have a formal, written
financial plan, everyone should have an estate plan dictating where
they want their wealth to go when they pass away. Otherwise, the
government has a plan for you...It’s called probate, and it’s not
pretty. Your finances are made public and the taxes and fees can
be higher, leaving your heirs less money and taking longer to obtain
funds. Again, there are many legal strategies for accomplishing
your goals, from the simple to the complex, including wills, trusts and
medical directives and letters of intent. Similarly, there are
many financial strategies for estate planning, ranging from forms of
ownership and beneficiaries, to trusts and various types of asset
protection investments.
Remember, the worst thing you can do right now is bury your head in the
sand. Money makes a great servant, but a terrible master.
Now is the time to examine where you are, where you want to be, and how
to get there. Taking these steps now will once again give you
comfort, confidence and control over your finances.
Contact our office if you have any questions about your investments.
Our
mission is to provide each client with excellent service and
expertise.
We are committed to
"Doing the
things other advisors neglect to do,
giving you and your family a better life"
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