Advice: How to Stay (or Get) Financially Strong in 2019
THE BIG THING I WANT YOU TO KNOW:
The new year often feels full of promise and optimism, but life’s (costly) curve balls are around every corner. You can’t avoid them, but you can prepare yourself to come out on top with a good plan.
2019 is Going to Be Your Year! No Matter What.
How is your new year’s resolution going so far? Though all of us start every year off with the best of intentions, something inevitably throws us off course EVENTUALLY. The question is, “How can we make progress in 2019 when life happens?”
Personally, it’s only the beginning of January and already an unwelcomed development threw off my family’s tentative timeline for the year.
Quick backstory: my wife and I recently purchased a new home. Before my family of five moves into our home, we’ve been in a rental while cosmetic updates like new flooring and painting are taking place in the new home. Turns out, our simple renovation took a complicated turn. We discovered major water damage mid-renovation that even flew under the inspector’s radar.
uncool, but so be it because that’s life.
Now, you don’t have water damage but you know #LifeHappens. How do you make a plan to actually progress your finances even when stumbles happen?
Actual peace comes from acknowledging the lack of control.
In 2019, you will be prepared for even the worst case scenario
I have no earthly idea what’s going to happen in the market in 2019 and don’t let those talking heads on cable news convince you they know what’s going to happen either.
Instead of toiling over predictions or trying to outfox the market (because that will never happen), my advice that I give to every client is to build a plan that’s designed to bend, flex, pivot and dynamically respond to the market.
I promise that it’s not a fun or uplifting exercise, but let your mind wander down every negative or tragic road. We’re not going to wish job loss, illness, a home fire or loss of a parent or spouse on ourselves, but it would be great to know that any of these miserable and volatile situations, you’ll find peace in your financial plan.
Here’s How You Will Create A Strong Financial Plan In 2019 - 3 steps
1 - Determine the amount of “risk” that you and your plan can handle.
If you’re saying “Huh?” already. That’s okay, but it' be really beneficial to talk with a fiduciary to help you look at your complete financial picture.
Risk is all about respecting your own limits.
Are you a thrill-seeking rollercoaster enthusiast or ride the docile merry-go-round kind of person? It matters because when your attitude is applied to money, you’re either the type who obsessively checks the market and gets your advisor on the line the moment the market dips or you’re content to ride through the market’s waves.
Following this reflection, identify a long-term plan that fits YOU and stick with it.
Step one, done.
2 - It’s all about diversity!
You not only want investments in different types of asset classes, but you want to be invested in a wide variety of asset classes. Don’t make the mistake of putting all of your money in one or two stocks or mutual funds. Go after emerging markets, international markets, micro companies because the more you diversify, the more you’ll protect yourself from any one sector of the market wrecking you.
This is the trick to flexibility, and one of the most important steps to finding and experiencing PEACE.
3- Rebalance your account. Make it a habit.
While it’s not the most popular of techniques with our clients, but this is the glue that holds the whole thing together.
When the market’s going up, clients love to call and instruct me to put more of their money into what’s going up. Actually, that’s not what I’m going to do. I’m usually selling off what’s going up to buy more of the boring stuff to keep your risk at the appropriate level. If what’s hot cools off tomorrow, you’ll need more of the stable funds to keep you centered.
The goal in planning is to assume the worst, but plan for the best.
It’s Easier Said Than Done
My new year’s resolution was to run a half marathon in 2019. I’m not off to the strongest start, but in all fairness today has a high of around 42 degrees. (And I’m more of a sprinter anyways #LordOfTheRings.)
Maybe you would like a coach, direction, or accountability. That’s exactly why Dynamic Money exists.
2019 is going to be amazing and you have BIG goals… if you don’t we want you to think up your BIG dreams for your life. Our team would love to help and give you our honest opinion with zero guilt trips because we all have to start somewhere.
Happy New Year! Go become financially strong this year. #FinanciallyFit
Celebrate the little steps of progress. You know the plan.
You got this!
What new habit do you want to spark in 2019? What’s one habit you’re going to let go?