By Raymond J. Ohlson CLU, CRC
Before you determine what you should do with your money, either figuring it out by yourself or with the help of a financial professional, you need to ask and answer some hard questions.
The questions will help you understand what your financial needs really are so you don’t choose or get sold the wrong solutions and help both you and any professional find the right solutions.
- Overall, what is your main financial objective? In other words, what are the things that are most important to you? What keeps you up at night?
- How much liquid money do you have and how much do you need?Think about emergencies. Will you be in need of a new roof? What about your heating and air conditioning units? Any weddings or other large expenses that are facing you in the near term? But, it doesn’t usually make sense keeping long term monies in a low interest rate instrument
- Are taxes a consideration? And what would a possible change in the tax law do to your financial plans?
- How much financial inexperience do you have? Yes, I use “inexperience” as most Americans have more Inexperience than they do experience.
- How much risk can you tolerate? Does a 10% drop in the S&P have you heading for the antacids?
- Who is dependent upon you? Are you part of the “sandwich generation”? Do you have kids, grandkids or parents that are, or may be, dependent on you for income?
- Take a financial snapshot, where’s your money today? Pull out the statements and compare your positions in relationship to the answers you have given above.
- How is your health? Do you feel as though a long term care need might be in the offing for either you and or your spouse?
- What are the two or three things that you want your money to do for you? This is where you have to look into the mirror, and with your spouse if married, and have an adult conversation. Pick the priorities and write them down.
- Finally, do you understand the realities of the solution? Yes, the realities. If a plan is developed to meet your goals are you prepared to face the reality that it is up to you to implement the plan