Another year has come and gone, and it’s been an eventful one. Over the last 11 months, we’ve seen big changes in politics and finance, and we’ve all reacted to those changes in one way or another. But could your reaction have put your future at risk?
I’ve laid out a few mistakes that you, or someone you know, may have made in 2017 and how to turn them around in the New Year.
Basing your investments on politics
The 2016 presidential election caused the stock market to drop and then surge, causing confusion and a whole slew of emotions for investors. For anyone who sold or moved the majority of their portfolios into the market, it may be time to reevaluate.
The Dow Jones and NASDAQ averages have continued to grow steadily throughout 2017, but just because stocks are doing well now doesn’t mean it’s time to put all of your assets into the markets. Having a diversified portfolio that takes asset class and company risk into account is almost always a safer bet for earning money on your investments.
So, yes, the stock market is doing exceptionally well, but it’s almost guaranteed that eventually it will correct itself. Don’t act on emotion when it does.
Not understanding your credit report or how it works
Unless you were unplugged from all social media, internet, television, radio and any real human interaction for a good portion of this fall, you probably heard about the massive Equifax breach. Over a 100 million people’s information was stolen in the breach and it prompted many of us to check our credit reports for possibly the first time.
Each year you are eligible to check your credit report for free and without penalty from each of the three consumer credit bureaus. We suggest spacing out your reviews from each company throughout the year to keep a closer eye on any suspicious activity. If you’re unhappy with your score, talk to your financial advisor about ways to help improve it.
Not saving enough
The unemployment rate in October fell to 4.1 percent, meaning there are fewer unemployed people in the United States today than there have been in over a decade. But that doesn’t necessarily translate into a workforce that’s prepared for the future.
According to a recent Bankrate.com survey, only 31% of people today have adequate emergency savings to cover six months’ worth of expenses. Whether it’s an injury, home repair or a car breaking down, you want to be prepared for the unexpected. Calculating your emergency savings goal isn’t all that complicated. Consider your home, food, transportation, utility and other necessary costs. Leave out things like your cable package, meals out on the town and shopping — these are the things you could more easily drop if an emergency situation did arise.
If you read through this list and are realizing that you made one, or more, of these money mistakes in the last 11 months, it’s not too late to turn things around. Being diligent and working with a financial professional can help you get back on a safer track in 2018.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Jim Sandager, MBA, CFP®, is the Senior Vice President-Financial Advisor at Wealth Enhancement Group® and co-host of “Your Money” on News Radio 1040 WHO on Sunday mornings.
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