- Get Organized
Spread out the statements, confirms and bank accounts
on the floor and organize every batch by the calendar. Organizing
the statements forces you to look at your returns and transactions
through out the year. Did you make too many transactions? Did you
sell something when you shouldn't have? The important thing is to
learn from your mistakes. The biggest problem investors have is that
they are not organized enough to know what they're investments are
doing for them. Getting started is the hardest part but confronting
that big pile is a must.
- Simplify Your Life
Do you really need five bank accounts and six brokerage
accounts? Consolidate your accounts into one or two accounts. If you
have fewer accounts it makes it easier for you to know what you own
and if you have the proper asset allocation. At financial firms like
Alamo Capital we can shop around for the best CD rates and keep it
all in one account. So, if you're worried about the FDIC limit of
$100,000 you can own CD's from five different institutions in one
brokerage account.
The same premise goes for brokerage accounts. The fewer
accounts that you have the better handle you have on your investments.
Let your investment advisor review your entire portfolio for the appropriate
asset allocation and recommendations.
- Have a Strategy
Work with a professional financial advisor and formulate
an investment strategy that works for you. The strategy has to make
sense to you and above all you have to be comfortable with it. Make
sure you have the proper asset allocation among different asset classes.
How much exposure do you have to the real estate market, tech stocks
or high yield bonds? Do you really know the answer? Maybe you have
half your portfolio in volatile tech stocks and you don't even know
it. If stocks go up one month don't take money out of bonds and put
it in the market. Look at the big picture and make your decisions
according to your long-term goals. Stick with your strategy. Don't
make costly emotional decisions.
- Get Your Estate in Order
It's one thing building a portfolio and another passing
it on to your loved ones. Make sure that you have a will, durable
power of attorney and a medical directive. Talk to an estate attorney.
He might recommend that you set up a living trust to reduce your estate
tax or shield you from a costly probate. We've all heard nightmare
stories of outrageous legal fees and unreasonable estate taxes. Protect
yourself by talking to an estate planning professional and an estate
attorney. The few hundred dollars that you spend today will save your
loved ones thousands when you pass away.
- Work with a Professional
After your health and family your money is usually the
most important thing to you. So, why do so many people pay so little
attention to it and don't seek professional advice? A big part of
the reason is that there is a barrage of advertisements that prod
you into investing for yourself. If you want to have some play money
to buy the next Microsoft put aside 5% of your investment dollars
for the long shot. The rest of your portfolio should be professionally
managed and reviewed on at least an annual basis. No one has a crystal
ball but a good financial advisor can give you the direction and advice
that will make you money in the long run.
