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AGS
FINANCIAL SERVICES |
Gary
F. Restall |
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Plan
for your financial
future
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How
do you fare?
Looking ahead, have
you established any
financial “New Year
Resolutions” to
correct some of last
year's carryover
concerns?
Financially, many people do not plan enough. With this article, I would like you to think about your finances from a balanced perspective. The whole is equal to the sum of the parts a mathematician might say. First, many professional financial advisors recommend that you should have at least 6 months of Cash Reserve on hand. This means that should an emergency (which usually comes when one least expects it ... and can least afford it) or an opportunity come along, you can withstand the unexpected or cash-in on your good fortune. A Cash Reserve is NOT “credit available” nor “100% cash-cash”, but actual “liquid cash” readily available. Even though it is NOT meant to earn you big money, it is extremely important for a sound financial foundation. The next area is Debt Management. Also, a huge area to review this time of the year. If you have any consumer debt, such as credit card unpaid monthly balances, various consolidation or personal loans, or any debt not-deductible from your taxes; you should try to eliminate it. Rather than “hoping” in a highly volatile stock market and many investments where there are no guarantees, paying down on or paying off certain debts could be an immediate and guaranteed non-taxable return on your investment. What do I mean by guaranteed? The return is based on your interest rate established by your creditor. Sometimes, your return could be 7%, 9.9%, 10.9%, or even 22.9% or higher. Where can you invest your money and obtain that type of guaranteed after-tax return? Continuing in your quest to review your financial well-being, consider your Risk Management Position and Estate Planning. Consider ALL of your risks and your potential needs - 1. human - health, dental, vision, both short-term and long-term disability, long-term-care, life, etc. 2. property and casualty - auto or vehicles, homeowners or renters, umbrella, etc. 3. goal funding and/or other purposes - home buying, education, gift-giving and/or estate planning, etc. How much does each issue require in dollars now and in the future? Keep in mind inflation. What portion can you self-insure vs. what portion do you want to pass onto a third party, i.e. an insurance company to insure? How can you or would you be willing to modify your lifestyle or your individual situation to eliminate or reduce some of your risk? If so, how and what would the results be? If you died pre-maturely, would your estate be public knowledge and would it be divided the way you would like? Do you care? Do you have a will yet, and, if so, when was it last updated? Is it funded or just legally prepared? Based upon your decisions, have you given your heirs increased worries, taxes, and other burdens? After your Cash Reserves, your Debt Management, your Risk Management, and your Estate Planning is in place, then you can jump into what many call the “fun” things of finances. Investments, Taxes, and Retirement. Are all three types of money that you may need (taxable, tax-deferred, and non-taxable) in the proper balance for your situation? Have you coordinated your investment portfolio with your retirement portfolio for sufficient diversification and tax management? Have you taken into consideration your age, your risk-tolerance, the length of time your investments are working, the purpose for each investment and how long you will need the resultant accumulation once you start drawing them down? Putting this all together, do you have a Master Game Plan where you evaluate each area mentioned above in conjunction with the other areas as a whole? Or is it a hit-or-miss approach addressing individual areas one-by-one? This could lead to potential problems. For example, you may be setting aside 15% of your pay towards your retirement goal and doing an excellent job in that area. But if you haven't addressed the potential for long-term-care, what would happen to your finances should a $65,000 a year facility bill arrive unexpectedly long before retirement? Can you combine some of these areas with one or more solution(s) to accomplish double or multiple duty? Are you the do-it-yourself type or do you need assistance from a professional? If not a do-it-yourselfer, and a professional is needed, what type is appropriate for you? One that looks at the whole situation and coordinates needs with specialists as needed or one that specializes just in certain areas? i.e. a banker for your savings/checking accounts, multiple insurance agents for insurance needs, a stock broker for your investments, a CPA/accountant for taxes, a retirement specialist for your 401k/403b, an attorney for the estate planning, etc. What about your income and wealth bracket? Some specialists deal only with the “super-rich” while others prefer the “middle-class” and others enjoy working with the “poor”. Whatever your need, someone is there. A new year is upon us. Where do you want to be this time next year? in 5 years? in 10 years? in 30 years? .... Why not start now? ___________________________________
When this
article was
written and
published, Gary F. Restall of
AGS
FINANCIAL SERVICES
was an
independent Registered Investment Advisor (financial planner/advisor), Insurance
Broker, and a Registered Representative with FSC Securities Corporation, a
Registered Broker/Dealer and member
NASD/SIPC.
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