Steps to Becoming Financially Secure for the Upcoming Year
Now that the New Year has come on the scene, what are you going to do about your financial situation? Isn’t it time to review your financial plan to see if it goes well with 2016? In fact, you should have assessed your financial situation a month or more ago. However, you cannot turn back the hands of time, so it is time to really get serious about your financial goals. You can make a prediction of your future financial state based on your current situation. That doesn’t mean you should be hard on yourself. It is never too late to make amends.
There are some quick steps that you can take to become financially secure prior to the end of the year. So don’t be discouraged. You can do it, but you have to remain focused, challenged, and disciplined. Get rid of the negative people around you who will tell you that it is not possible. Anything is possible when you are ready to make changes to your life.
Check Your Portfolio
It is time to run your portfolio through a check up phase. This means that you should not wait too long to start looking at your profile for any risk associated with your current investments. Of course, investment and risks go hand in hand, but you fare better when you diversify your investment, putting some of your money in short term reserves and some in stocks and bonds. You want to take risks that will make you sleep better at nights. For long term investment, match your level of tolerance to risk factors with your persona. To help with gauging the level of risk that you can tolerate, consult with a financial advisor.
Time is Important
To achieve your financial goals, it is best to manage your time. The longer you wait, the higher your risk. You have to decide how long to gradually invest prior to taking an income. This is true after you have retired and need cash to meet your daily expenses. In that case, you have to also consider short term investments that have lower risks and lower returns. The bottom line is whether you can invest without having to take money for your existing expenses for up to five years.
Do you have an emotional connection to investment risks? If you do or do not, it is still going to decide the nature of your portfolio. Do not react in a negative way at the ups and downs of the financial market. If you do, then you will be able to calculate your level of emotional tolerance to know that you need a financial advisor more than the person who doesn’t.
Your Risk Profile
After you have assessed your risk profile, you will be able to determine whether you need to rebalance and shift your investments. This means that you may have to sell some of the assets that are not performing. You may also have to add some assets for better investing.
If you are right on target with your financial goals, you should enjoy the performance of your portfolio and the fact that it goes along with your risk profile. Take time to evaluate your debt, life insurance, cash available to be used, income, expenses, retirement plan and household budget. When in doubt, consult a financial professional for help. The fact that you have read this in its entirety says that you are in the process of having an excellent start to the New Year. Good luck!