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Is Your Financial House In Order?
by
Gary F. Restall
Money Talk
With the recent stock market volatility, did you experience any repercussions from this recent April massive correction? How much did you lose on Friday, April 14th or that entire week? Five percent, 10%, or as some did 25%, or even 35%? Did you receive those unwanted "market calls" demanding that you bring in x amount of dollars to cover your now short position? What would happen to you if the market continued down to a 50% or even 75% correction? Looking at the world scene, some are predicting that. The volatility is not over with yet.
As a professional financial planner in our own local area, part of my role is to educate Referrals and Clients on potential possibilities, and then review the possible pros and cons of the various options as a pro-active stance. To be ready for any scenario. Are you prepared for any scenario?
Looking at the rest of your financial house, are you positioned ..... solidly positioned..... no matter what happens in the stock market? From my vantage point, it seems most people are not.
Remember the saying, "A bird in the hand is worth two in the bush"? Why not build your financial house on solid rock rather than on shifting sands so that when the stormy weather comes, almost everything will remain vs. most being washed away?
It has been said that the savings rate in this land of ours is way down. That is not healthy. How’s your savings rate? Are you spending more than you are earning? Shame on you! If I offend, I’m sorry. From professional and personal experience, when people spend more than they earn, trouble looms. Simple fact of life.
Let this article shake you to return to the time-proven basics. Steady conservative progress has given lots of people peace of mind and helped achieve many goals in the time frames sought. Why not try it and see if it might work for you?
To keep things simple, start in four areas. The first is your attitude. Your attitude may need to be adjusted to think more conservatively - build on a solid proven way vs. pie in the sky greed. The second area is to get out of debt. That is an immediate return on the investment, anywhere from 6% to 25% or so ... after taxes. This includes living within your means and not in competition with the neighbors. Sorry about the bluntness, but sometimes the truth hurts. The third area is having a cash reserve for emergencies and the everyday opportunities that may come up. Six months is what many seasoned financial planners recommend to their Referrals and Clients. How much cash reserve do you have? If you have less than 6 months, then you probably should NOT be investing in the stock market, yet. The fourth area is risk and the corresponding insurances. How’s your safety net, in case.....?
You’ve no doubt heard Christopher Reeves say in many commercials lately that a disability can happen to anyone, at any time, without notice, and bankrupt them if not protected. How will the bills be paid should an unexpected disability happen to you? What about a pre-mature death? Do you have certain obligations and/or desires that may not be covered should that happen? Or, let’s think about something nobody likes to think about - long-term care. No one wants to go into a nursing home, but aren’t they almost all full?
Time to get the head out of denial and face the possibilities. Have you addressed YOUR situation? Statistically speaking, many people are improperly insured - over, under, right amount but wrong vehicle. Where do you stand?
These four key basics don’t even include estate planning, taxes, retirement planning and/or monitoring, and finally investments. In this complex world of ours, almost without exception, I’ve found that most people could benefit from the help of a professional to at least review their financial house. There is also information available from many other sources.
During this huge market volatility, may I offer a strong suggestion for consideration to return to the basics - 1) conservative practical attitude, 2) get out of debt and live within your means, 3) build a 6 months cash reserve fast, 4) review your risks and insurance coverages? Everyone is different so only you can make the final decision on what YOU do with your financial house. Rock solid or shifting sand?
# # #
Gary F. Restall of AGS FINANCIAL SERVICES is an independent Registered Financial Planner, Registered Investment Advisor, and an Insurance Broker. His office is located in Northboro and he can be reached for additional questions. You may also visit his educational website at www.agsfinancialservices.com.