by Richard E. Reyes, CFP
Lets talk bit about some of the things I have seen lately with folks who I have spoken with in my office and out. I have been seeing people again getting a little comfortable with our current economy and forgetting about events of the recent past.
Although we are definitely living in a roller coaster economy with many ups and downs and some areas of uncertainty, there are many positives that have occurred since the great collapse of 2008. At least in my circles of clients, prospects, and business people I associate with, business and jobs are improving some, markets are way up since 2008 where most who stayed invested through the downturn have almost fully recovered their losses in their equity portfolio, in addition we are probably getting a little more comfortable with current situations in our lives and economy.
So what has me concerned is that we seem to be getting comfortable again. I am starting to get asked some questions and watching as others begin to start behaving badly again. Remember that it is many of the mistakes I see people committing now that are the very same ones that caused them to get into trouble just a couple of years ago. We seem to be letting our guard down and believing that “THAT WON’T HAPPEN TO ME”, especially not again.
Well I am here to tell you that there are more serious threats to your financial security that most people pay no attention to … that they should pay attention to! There is also no magic, there is just careful planning and having an understanding of risk.
So instead of going into a grand list of items that can threaten our financial security and retirement. Let’s look at 3 areas which could be easily fixed and probably make you feel more comfortable.
1. Not Enough Cash
One of the primary rules of financial planning is to have cash on hand for emergencies such as a loss of a job, getting hurt or sick, broken air conditioner or even a roof leak. Whatever it is. The usual rule of thumb is to have 6 months of living expenses stashed away in very safe place such as a money market or high yielding checking account. However, please note that 6 months to me is just a starting point and there is a lot of room here for discussion. But some factors such as occupation, age, stage in life, comfort level, and many other issues are essential to determining the amount one should have in cash on hand. In addition, I know that rates stink right now but this is should not be an excuse. Think of cash as cheap insurance.
2. Not Enough Life Insurance
This topic is near and dear to me because as a child I was raised on life insurance since my father past away unexpectantly in an accident at a young age. Interestingly enough, he passed away about 45 days after obtaining life insurance.
The American Council of Life Insurer’s states the average family carries about $196,200. This number is almost right on as I have lived it when counseling many. With that amount of life insurance, if someone were to pass away, investing that money conservatively would earn the beneficiary about $2000 to $3000 a year or about $200 a month. Here’s the real question, would your family be able to make ends meet on $200 a month.
3. No Long-term care insurance
If you or your spouse got sick and needed care in your home or someplace else, would your finances be able to handle another $50,000 to $60,000 per year in additional expenses?
For most the answer to this is no. Which means if you’re 55+ you should have a plan in place to cover these potential expenses whether it’s insurance or making sure you have enough money to ‘self-insure’
So remember, these are just some of the most basic threats to your financial security you might not be paying attention too. But I am here to tell you that one needs to be prepared. These are simple things you can do that go a long way to securing your financial success.
If you are looking for a brief, plain-English introdution to investing, don’t forget to BUY my book, Dirty Filthy Lies My Broker Taught Me & 101 Truths to Money and Investing. Order my book now and I will also send you my Investor Awareness Guide and listen to our The Seven Deadly Investor Traps that Destroy Your Wealth and the Three Power Strategies to Fix Your Portfolio Fast! These materials will equip you with the information you need to begin putting your investment experience back on track.
Wealth and Business Planning Group, LLC (The Financial Quarterback™) is a Registered Investment Advisor in the State of Florida that provides Fee Planning and Asset Management. Depending on your state of residence, Wealth and Business Planning Group, LLC (The Financial Quarterback™) may not be able to immediately provide services. For more information go to www.thefinancialqb.com. Richard E. Reyes, CFP is an Investment Advisor and President of Wealth & Business Planning Group, LLC (The Financial Quarterback™).
