Meeting Your Financial Goals: Asset Management Solutions

By Bruce Smith | May 13, 2016

Are you on track to meet your financial goals? Clients often share their concerns about making -- and keeping -- the right financial resolutions with our wealth advisors, and we can certainly empathize.

Bruce Smith is a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyAfter all, the wealth management process is complex, with many moving parts -- and unfortunately, that makes it easy to get sidetracked... or completely off track. Whether you want to grow your savings accounts, focus on retirement planning, pay down debt or create an emergency fund, these 5 asset management solutions will help keep you on the right track to meet your financial goals and resolutions. 

1. Strategic Wealth Planning Requires a Financial Plan

Before you embark on the planning process, you must create a clear, realistic picture of your current financial situation. The best way to start? Create a financial plan.

Begin by collecting information from your taxable accounts, such as 401(k)s, individual retirement accounts or IRAs, and your savings accounts. Now list any debts you owe, such as student loans, mortgages, car payments and credit card debt. Note details such as the timeline for repayment, the interest rate and your repayment period. Don't forget to include taxes in your debt load -- how much you owe and any increases you're anticipating.

Next, take a look at your investment portfolio. You'll need to evaluate:

  • The amount you hold in stocks, like mutual funds and exchange traded funds (ETFs)
  • The amount you hold in bonds, including strategic and mutual bond funds
  • The amount you hold in cash comparable assets, such as money market accounts and certificates of deposit or CDs

How did your portfolio perform over the past year? Compare your portfolio's performance to an index of similar assets; if there's a small underperformance, fees, loads and expenses may be to blame. If the underperformance totals more than a few percentage points, it's time to sit down with your wealth advisor and revisit your asset allocation.

2. Your Comprehensive Financial Plan Should Include an Emergency Fund

If unexpected expenses pop up, are you prepared? Ideally, your emergency fund should contain at least three months worth of living expenses. For instance, if your income totals $50,000 annually, aim to sock away at least $12,500 in your "rainy day" account, and if you make $100,000 per year, shoot for $25,000.

Sound excessive? While you may feel like having $5,000 to $10,000 in your emergency fund is adequate, it wouldn't offer much protection in case of a catastrophic event. Play it safe and enjoy the peace of mind that comes from knowing you have a true safety net in place when you need it most.

3.  The Savvy Investor Knows When to Balance That Portfolio

While it's easy to feel excitement when you watch your portfolio grow, it's just as easy to feel panic when those number fall in the opposite direction -- as they will on occasion. However, letting emotion get the best of you often leads to overreaction to the market's normal fluctuations. 

Market turbulence is simply a fact of life. In the long run, constant buying and selling in an attempt to pick the winners or time the market doesn't do anything but reduce your returns by upping the amount of fees, loads and expenses that you're paying to play the market. 

Instead, hedge your investments through diversification. A well-balanced portfolio contains a wide variety of assets allocated across classes to reduce correlation; in other words, when a certain swath of assets goes down, it's balanced by a swath of assets that are going up. A balanced, diversified portfolio offers protection against market volatility.

4. Financial Strategies: Taking Advantage of Tax Benefits

Bruce Smith is a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyTake full advantage of tax benefits by maximizing the amounts you sock away in your tax-deferred Individual Retirement Accounts or IRAs and traditional 401(k)s. For 2014, that's $17,500 for 401(k) plans and $5,500 for IRAs.  

Plus, if you're age 50 or above, you can play "catch-up" and contribute an extra $5,500 per year to your 401(k) and an extra $1,000 annually to your IRA or Roth accounts. 

Will you be in the same tax bracket after you retire? If you can afford to pay the taxes now, while you're still earning a paycheck, rather than later, when you're on a fixed income, consider making the maximum contributions to a Roth. 

5. Strategic Financial Planning: What if?

Finally, ask yourself "what if?" Running through a few worst-case scenarios in your mind will help you gain a better idea of what, exactly, your savings would be able to withstand. Considering factors such as natural disaster damage or serious health problems now will help you make better plans for the future -- and keep your financial goals on track.


Posted in Financial Planning