Did you make any New Year's Resolutions for 2015? Were any of your resolutions related to your finances? If yes, then you are in good company. Some 54% of your fellow Americans did, too.
With a little focus, discipline and follow through, you can avoid being among the 98% of Americans who fail to fulfill their resolutions when December 31, 2015 rolls around.
Well, there is no time like the present, so let's roll up our sleeves and review some pointers from a Las Vegas Review-Journal titled “7 ways to give your finances a facelift in January.”
Establish an estate plan. Do you have a spouse, children, elderly parents, own your own home, a savings account, or investments? If yes, then you should create an estate plan ... and update it from time to time. Doing this will save your loved ones additional strain at a difficult time, and ensure your wishes are carried out after you pass away.
Rebalance your portfolio. Have you looked at your investments and/or retirement accounts lately? If no, then you should rebalance them at the beginning of the year.
Your portfolio likely has varying investments in different asset classes. Over time, the market value of each investment earns a different return. This shifts the weight or the proportion of each investment within the portfolio.
For example, if a certain fund does really well and second performs poorly, a once 50-50 split could teeter-totter to something more like 80-20. Like an automobile tire that is out of balance, it is only a matter of time before your portfolio blows up or worse.
Shift the weight of your portfolio investments to keep your risk low and maximize your returns.
Use tax-advantaged accounts. Take advantage of the numerous tax-advantaged accounts available, such as a 401(k), IRA, and Health Savings Account. These types of accounts let you enjoy tax-deferred or tax-free growth of your money. Consequently, this tax-deferred compounding magic can mean the difference between a secure retirement and, well, part-time employment. Added bonus: pre-tax contributions can lower your current taxable income.
What next? Consult an experienced estate planning attorney to help you get 2015 off to a great start!
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Las Vegas Review-Journal (January 12, 2015) “7 ways to give your finances a facelift in January”