Mitch's Mailbox

April 10th, 2024

How To “Spring Clean” Your Finances

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Eva M. from Independence, MO asks: Hello Mitch, I’m one of those people who uses the transition to spring to do some deep cleaning and life organizing. This year I’m adding my financial life and investments to the list of items I want to tidy up. Do you have any tips to guide the process along? Thank you, and have a wonderful spring season!

Mitch’s Response:

I love your thought process here. In my view, it’s always a good time to review your finances and investments to make sure everything looks good and on track. And while you seem like the kind of person who has already done her taxes, this time of year offers a good opportunity to get your financial life out on the table to see what adjustments you can make. As the saying goes, there’s always room for improvement.1

Below, I’ll lay out four ideas that apply to people of any age, since it’s unclear if you’re still working and saving or are retired, perhaps.

  1. Scrutinize Your Cash Flow and Spending

Most people should have a clear understanding of money-in and money-out each month. There are several ways to gather this data, whether by maintaining a spreadsheet, using a budgeting app or website, or simply working with a financial advisor to map out your budget.

Protecting Your Portfolio Long-Term

Navigating market changes can be difficult for every investor, but particularly for those trying to build their retirement portfolio. I still believe it is possible to avoid the damage of economic downturns and achieve your retirement goals.

To help you, I am offering a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own. You’ll get insight into key retirement planning details including:
• Accurately forecasting your retirement income needs
• The two phases of determining your asset allocation
• Developing an investment discipline that allows you to get good results over time
• Avoiding self-sabotage—what you need to know
Plus—our views on key steps to create and maintain the ultimate retirement portfolio

If you have $500,000 or more to invest, download our guide today!

Get our FREE guide: 7 Secrets to Building the Ultimate DIY Retirement Portfolio2

The objectives here are two-fold. First and foremost, as a baseline, you need to ensure that you’re living within your means. Second, I subscribe to the strategy of saving 20% of your income each month and then allocating the remaining 80% to your monthly expenses and lifestyle needs. In other words, you should be able to live comfortably off 80% of your monthly income, whether you’re working or retired.

  1. Review Your Asset Allocation

Once you’ve ‘tidied up’ your budget and feel good about income and spending for the next year, I’d recommend reviewing your asset allocation.

Reviewing asset allocation every year ensures that your portfolio aligns with your short and long-term goals, risk tolerance, and current market conditions. It also offers the opportunity to rebalance investments in the event that your portfolio has strayed from your target allocation. I would also work with a financial advisor to run a Monte Carlo simulation against a broad set of returns, inflation, and cash flow scenarios to “stress test” your portfolio against your long-term cash flow needs and growth objectives. Zacks Investment Management could help you with this.

  1. Check the Box of Emergency Savings

In my view, everyone should have about 9-12 months’ worth of income in cash—whether that’s in a savings account, a money market, or some other very liquid and risk-free security. If you don’t have this level of cash savings, this item should jump to the top of your list of goals for the rest of the year. This cash is your hedge against the uncertainties that life surely brings from time to time, and allows you to avoid tapping your investments if an unexpected expense arises.

  1. Establish and/or Review Your Estate Plan

In my view, everyone should at minimum have a will and a healthcare directive, but power of attorney also makes sense in many cases. Failure to create even a basic estate plan can subject your assets to probate and potentially higher-than-necessary taxes, neither of which is a desirable outcome. In addition to mitigating taxes and legal complications, estate planning protects assets from creditors and can designate guardianship for minor children or dependents. In the spirit of spring cleaning, estate planning can ensure your ‘house is in order.’

To further help you with your portfolio, I recommend downloading our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio3, which provides a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own. In this guide, you’ll get insight into key retirement planning details including:

• Accurately forecasting your retirement income needs
• The two phases of determining your asset allocation
• Developing an investment discipline that allows you to get good results over time
• Avoiding self-sabotage—what you need to know
• Plus—our views on key steps to create and maintain the ultimate retirement portfolio

If you have $500,000 or more to invest, download our guide today!

Disclosure

1 Wall Street Journal. April 2, 2024. https://www.wsj.com/finance/investing/investing-portfolio-spring-2024-eb1ab176?&mod=djemMoneyBeat_us

2 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.

3 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

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