Regarding delayed gratification, true financial wellness means experiencing financial health today and tomorrow. That means looking ahead to your retirement years and doing your best now to anticipate your immediate needs when you no longer wish to work or are unable to continue working. During your prime working years, it is incumbent on each of us to establish long-term revenue streams that will provide for safe, steady income during future years without making ourselves susceptible to whims of the stock market or general economic climate. This requirement, while needing some research and dependable advice, is by no means unattainable or out-of-reach financially.
Sadly, many people with foresight lost a significant portion of their retirement savings (often in the form of their 401k plans) in fall of 2008 with the sudden, dramatic downturn of the U.S. economy that accompanied the almost simultaneous Wall Street, automotive industry and Fannie Mae/Freddie MAC crashes.
While there’s no sure way to guarantee sidestepping similar situations in the future, some “due diligence” (careful, thorough research) and the guidance of impartial, experienced financial experts can help minimize your financial exposure over the coming years. Here are a few fundamental steps you may wish to take to protect your long-term financial health:
• Diversify your sources of income. Don’t depend on a single source of cash flow because if it crashes…well, you can fill in the rest. Diversification applies whether you are a completely retired individual, are semi-retired, have a home-based business, or own a small or large business.
• Investing in the stock market is risky, but it does support the American economy and can sometimes pay off. Never “play the market” with the intention of buying and selling stocks within a very short period of time. Avoid gimmicks such as “penny stocks” and “junk bonds”—the amazing success stories you hear often omit many relevant facts or are total fabrications by silver-tongued take-the-money-and-run charlatans. Invest only a minimal portion of your designated investment funds in the stock market. How much, you ask? No more than you can afford to lose without compromising your current financial needs or future lifestyle. Whatever form it takes, gambling is gambling, and the same precautions you would take in Las Vegas or Atlantic City generally apply when dabbling on Wall Street.
• Choose your financial adviser as carefully as you would choose your physician. Don’t judge someone’s expertise by handsomely framed certificates on the wall, professional society memberships, recommendations of your relatives or the lavishness of their offices. Be sure to have get-acquainted meetings with at least two potential advisers before making your decision. Ask yourself these questions:
• Does this person make you feel comfortable discussing your personal finances with them?
• How experienced is this person as a financial adviser? Where did they get their training?
• About how many individual clients do they serve? Do they offer some of them as references?
• Is this potential adviser a good listener who pays full attention to your specific situation and needs?
• Does he or she explain your options in terms you can understand?
• How are their fees determined?
• Does your “gut instinct” tell you this person would appreciate your business, welcome your questions and return your calls promptly?
By following these simple principles, you will quickly be back on the road to financial freedom. Don’t forget to enjoy the journey and “smell the roses” along the path!