“Tell me and I forget, teach me and I remember, involve me and I learn.” — Benjamin Franklin
Last month’s advice suggested that a period of financial stress should not keep you from celebrating the holidays with joy. If readers heeded this advice, hopefully, family, friends or associates were impressed with your clever presents!
This column provides advice each month and strives to make financial decisions less complex. The start of a new year is an opportunity to conduct an annual review of your investments and savings. This year’s review should be “fun” due to a burst of higher prices posted by most stock and bond markets late in the year — also known as a “Santa Claus” rally — leading to outstanding results for 2023.
While many readers may have avoided reviewing accounts after the dismal results posted for 2022, there should be no excuse to avoid conducting this year’s review. A starting point to improve your financial security is to update your analysis of the various “buckets” of savings – as recommended in past columns.
Once these buckets are identified, separate each investment into stocks, bonds, and money market/savings and determine your percentage allocation to each asset class. You might be surprised to find that your allocation to stocks is much higher than expected due to the 15-20% returns generated by many index benchmarks. Bond and money market investments also produced good returns approaching 5% or more.
Use this analysis to decide if you should conduct “rebalancing” by reallocating monies from one asset class to another to get back to your target allocation goal. If you are unsure of how to decide which allocation is right for you, or if your financial situation changed from the prior year, review the resources suggested in previous Cents & Sensibility columns or investigate the multitude of resources available online: “How can I determine a proper asset allocation?”
The holidays provided ample opportunity for family, friends and associates to discuss finances, but odds are that conversations regarding research that led to new purchases of a television, car, or appliance were more common than, “Do you have an emergency savings account? How is your 401(k) invested? Does your company provide a match? Have you identified financial goals? Are you on track to meet these goals?”
If you cannot answer the questions above, the recommendation action for January is to stop ignoring your finances and use last year’s stellar results as encouragement to conduct a full review of your assets. Set aside a few hours on one of these dreary January days and take steps to improve your financial security by having a plan.
Not having a plan is not a plan.
For additional information on this topic outlined in previous columns: https://therecordnewspaper.org/editorials-commentary/cents-sensibility/
Beth Stegner Peabody is CEO of Stegner Investment Associates and a graduate of Sacred Heart Academy and St. Agnes School.
