| 'We have to be defensive.' Here are year-end strategies from advisors amid volatility, rate hikes, inflation | | |  | WED, SEP 28, 2022 | | | | Ok, I get it. Dealing with your money matters is a necessary chore that is not exactly fun.
And while it may seem boring at times, it is very important, especially when it comes to year-end financial planning.
So, kudos to you if you've taken the time to start mapping out your year-end financial plan.
If you haven't started, it's time to get serious. That means putting down the remote control, the nachos and the dip and starting to focus on key money matters.
That annual financial plan is a way to determine where you are financially at this particular moment. This means taking into consideration all your assets — how much you get paid, what's in your savings and checking accounts, how much is in your retirement fund — as well as your liabilities, including loans, credit cards and other personal debts.
Don't forget to include things such as your mortgage or rent, plus utility bills and other monthly expenses.
This snapshot should also factor in what your goals are and what you'll need to accomplish in order to get there. This can include things such as retirement planning, tax planning and investment strategies.
It's something that you will want to handle before saying goodbye to this year.
Doing so will help ease your mind and allow you to focus on the year ahead. I am working with my financial advisor right now on my annual plan. Here are some key points my advisor and I are reviewing that I will share with you.
Review any beneficiary designations that need updating. Review tax withholdings and all insurance needs. This should include health insurance, life insurance, homeowners insurance and auto insurance.
Do a thorough review your portfolio — and diversify as needed.
It's so important to take that close look at your overall investment portfolio and see how it fared over the past year and determine whether adjustments are needed to keep it on track.
When the stock and bond markets go up or down, your target portfolio mix can drift off course if some of your investments become more or less valuable. Rebalancing is buying and selling across your portfolio to bring your investments back in line with your target.
Here are some questions my advisor asked me to answer: - How did your investments perform during the year? Did they outperform, match, or underperform your expectations?
- What caused your portfolio to perform the way it did? Was it due to one or multiple factors?
- Were there any consistencies or anomalies compared to past performance?
- Does money need to be redirected in order to pursue your short-term and long-term goals?
- Is your portfolio adequately diversified, and does your existing asset allocation still make sense?
Addressing these issues might help you determine whether your investment strategy needs to change in the coming year.
As you can see, financial planning is far from a static process but is, rather, very dynamic. There are many moving parts to a properly designed financial strategy. Taking the time to plan before year-end could help you avoid costly mistakes, and help protect and give you more control over your money matters.
For more cool stuff like this, be sure to visit CNBC's Financial Advisor Hub and Personal Finance section. | |
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