Ten SIMPLE Financial Planning Strategies to Restore Your Confidence
By, Marc S. Freedman CFP®
Today’s economic environment is uncertain, challenging and upsetting. Many investors
have seen their family’s net worth almost split in half in less than one year. Is it possible
to restore confidence and rebuild control over your financial future? It is my hope that the
following ten strategies will provide a launching point to help you re-focus and reprioritize your financial life.
1. Maintain an Emergency Fund – You should always maintain a reserve account equal to
3-6 months total expenses in an FDIC Insured bank account. Never consider investing
money, if your emergency fund isn’t fully funded. You should always have easily
accessible cash on hand.
2. Examine Your Expenses – We have all succumbed to the temptation of good fortunes
and excessive spending at some time in our life. Now’s the time to revisit NEEDS vs.
WANTS as well as Fixed Expenses vs. Fun Expenses. Your mortgage, utilities costs, food,
insurance, auto expenses, etc are fixed costs. The fun expenses include dining out,
vacations, manicures, lawn service, club memberships, lottery tickets, electronics
purchases. If money is tight, consider strategies to limit the “fun stuff” for a while.
3. Safeguard Your Short Term INCOME Needs – If you draw money from investments to
supplement your spending needs, consider allocating three years of distributions from
your investment account into a highly liquid cash investment. For instance, if you rely
on $2,000 per month from your $500,000 investment account – consider liquidating
($2,000 * 36 months) $72,000 from investment risk and secure your money in a safe
highly, liquid product such as laddered certificates of deposit or savings accounts. Your
remaining portfolio should continue to participate in a balanced collection of stock and
bond based investments.
4. Rebalance Your Portfolio – Revisit your existing investment account and insure that its
current asset allocation remains inline your overall risk tolerance and time horizon.
Registered Investment Advisors
Eight Essex Center Drive · Third Floor · Peabody, Massachusetts 01960
Tel (978) 531-8108 · Fax (978) 532-2666 · Email: [email protected]
Securities offered through LPL Financial · Member FINRA/SIPC
5. Harvest Tax Losses – This is a rare opportunity to accumulate tax losses that can be
used to offset realized gains you might earn in future years. Be aware that despite a
challenging market environment, many mutual funds still anticipate paying taxable
capital gain distributions. Now may be a great time to realize your losses, and
reposition your portfolio for future possible gains.
6. Avoid Speculation – This is not the time to try to recoup losses with quick fix investment
strategies. If you’ve never used hedging strategies, traded individual stocks or
attempted to time investment purchases, now is not the time to start.
7. Invest in the Stock Market – Rather than trying to time the market, if you have cash
available, begin building positions in well-managed, highly regarded equity portfolios .
This may be a rare occasion to invest in great American companies at bargain basement
prices. Although past performance is no guarantee of future results.
8. Don’t give up on your 401k – This employer sponsored pre-tax investment account
remains one of the most sound investment opportunities for working Americans. In
fact, contrary to popular belief, you should wish for the stock market to head downward
during your “working years” so that you can buy shares at lesser and lesser prices. If
you believe that investments will recover over time, never abandon your systematic
investment strategy in down markets.
9. Review Beneficiary Designations – Challenging economic conditions offer rare
opportunities to reflect and rethink about our life today, as well as the legacy we hope
to leave behind. Be sure that you review both your primary and secondary beneficiary
designations on retirement accounts, life insurance policies and annuities.
Registered Investment Advisors
Eight Essex Center Drive · Third Floor · Peabody, Massachusetts 01960
Tel (978) 531-8101 · Fax (978) 532-2666 · Email: [email protected]
Securities offered through Linsco/Private Ledger · Member NASD/SIPC
10. Seek Professional Guidance – Now more than ever consumers should be seeking the
independent, objective advice of a Certified Financial Planner professional. Yes, you will
pay for advice, but in the end, I suspect that after meeting with someone who is both
ethical and independent, you will only wish that you sought help sooner. To find a
competent, ethical, Certified Financial Planner in your community visit
http://www.fpaforfinancialplanning.org
The following advice was provided by Marc S. Freedman CFP®, President/CEO of
Freedman Financial, Peabody, MA. www.freedmanfinancial.com For more information,
please call 978-531-8108. Freedman Financial is a Massachusetts Registered Investment
Advisor –Securities are offered through LPL Financial – Member FINRA/SIPC.
Registered Investment Advisors
Eight Essex Center Drive · Third Floor · Peabody, Massachusetts 01960
Tel (978) 531-8101 · Fax (978) 532-2666 · Email: [email protected]
Securities offered through Linsco/Private Ledger · Member NASD/SIPC