Making Your Fiscal Fitness New Year’s Resolution
January 2016: La Canada Flintridge Neighbors
By Brad Creger
With the New Year finally upon us, many of us will make our resolutions over the next few weeks. Keeping these resolutions is often a different story. The idea behind a New Year’s resolution is to improve one’s life. One resolution that seems to always be at the top of the list for many is to start going to the gym, to workout more often or to get in shape. However you have phrased your “better health” resolution, there are obvious long-term benefits for sticking with it.
If you workout 30 minutes per day, 5 day per week, at the end of the year you will have invested 130 hours toward a healthier future. I don’t think anyone would disagree that this would be a good use of your time and energy.
Another resolution that you might want to consider is to spend a few hours getting a “second opinion” on all aspects of your finances.
You probably have heard that many Americans spend more time planning for their next vacation than planning for retirement. Are you in this group? When was the last time you spent any time reviewing your finances? Let’s face it, most people don’t enjoy thinking about money and taking care of their finances. I get it. It’s often difficult to ask for help and asking for help with your money is even harder.
But if you honestly think about it, your health and your wealth are among the biggest factors in determining whether or not you will enjoy your retirement. Failure to take care of either properly will dramatically impact the quality of your life during retirement.
A proper review by an independent third party may take only a few hours, but could have an even more dramatic impact on your future than years of going to the gym as some financial mistakes can be difficult, if not impossible, to recover from.
What should a good second opinion involve? You should review anything that affects your finances. At a minimum you should review your living trust documents, tax reduction planning, business planning, employee benefits, insurance coverages and investments.
Can you have one advisor review all of this for you? Yes, if you can find a cross-disciplinary advisor who is qualified. But do not hesitate to see multiple professionals if this is the best you can do. Remember, you are getting a fresh perspective on what you have in place. Targeted feedback and ideas that might help you reach your goals should never be avoided. If you find one small area that can be improved, the time was well spent.
One word of caution; be careful when you talk to a broker who criticizes investments that his firm doesn’t offer. If they can’t sell or take over the management of your current investment, they might not take the time to understand it well enough to provide legitimate feedback. Be careful about opinions not based on third party sources like Morningstar or something similar. Remember, investments involve risk and there is no guarantee on performance so during a review the analysis should be mainly focused on suitability for your situation and if the investment meets your goals.
This is just my opinion, but it’s your money! Be open to new ideas and seek a fresh perspective at least every three years as you never know what the New Year may bring.