7 Wealth Planning Considerations Before You Invest

By Ginger Weber | March 16, 2018

Feeling stumped — or overwhelmed — by your investing options? You're not the only one. At Premier, our wealth advisors field questions about portfolio creation and management every day. 

Ginger Weber is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt County The sheer amount of available financial choices can make it difficult to make investment decisions, even for experienced investors! Working with a trusted wealth advisor can help, as can educating yourself as to your options. Read on to discover seven factors to consider before you meet with your investment professional. 

1. What's Your Current Financial Situation?

Painting an accurate, realistic portrait of your current financial situation will help guide you through the decision-making process. Consider factors such as your debt, your savings, and your time horizon. The key is using this information to find the right balance between socking money away for growth and having enough on hand if the need arises.

2. Determine Your Financial Planning Goals

Everyone has different reasons for investing; what are yours? Whether you're striving for an early retirement, saving up for a new home, or funding your children's college education, your investment goals will reflect your individual needs and situation. Determining your long-term goals, and your liquidity needs, will help you identify the right investment choices for your portfolio.

3. Wealth Planning: When Will You Need Funds?

As a general rule, plan out your cash-on-hand needs from 12 to 18 months in advance. This gives you time to liquidate, if necessary, as some resources are more easily liquidated than others. Keep in mind that asset sales have tax implications, and that higher-risk investments are more appropriate for long-term horizons.

4. What's Your Risk Tolerance?

Every investor has their own personal level of risk tolerance; knowing yours can help you make the best decisions for your situation. Keep in mind that your level of tolerance may change based on your age, your time frame, your financial situation, and current market conditions. This online risk quiz tool can help you assess your personal tolerance for risk. 

Ginger Weber is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt County 5. Is Your Portfolio Truly Diversified?

You already know not to put all your eggs in one basket, but a truly diversified portfolio features asset allocation across a range of securities. Diversification helps mitigate your exposure to market volatility, providing you with peace of mind over the long-term. 

6. How Involved Do You Want to be in Wealth Planning?

While tools and resources exist for those who wish to micro-manage their investments, we see that approach as the best way to let the ups and downs of the market prompt an emotional reaction. Instead, we recommend a passive investment approach that takes the long-term view. Work with your trusted wealth advisor to determine the level of hands-on (or off) involvement that works best for you.

7. Remember: There's Just One Sure Thing

When it comes to investing, there's only one thing for certain: The market will go up, and the market will go down... and up... and down... and it will continue to do so. The key lies in taking a deep breath and not reacting. Taking the emotion out of the equation helps you stay the course and stick to your long-term plan. 

When you have a handle on your goals, your financial situation and your risk tolerance, you'll be ready to meet with your wealth advisor and craft a diversified, balanced portfolio to help you along the path to meet your financial goals.




Posted in Financial Planning, Investment Guidance