In light of recent
global events, the world certainly seems like a more
dangerous place, threatening your sense of personal
safety and wellbeing. While there may not be much
we can do on an individual level to reduce the threat
of terrorism, war, or even stock market corrections,
we can ensure that we take all appropriate steps to
mitigate those risks under our control. If you’re
looking for ways to increase your financial security,
consider the following tips.
GET YOUR
ESTATE IN ORDER
While dealing
with your own mortality is often difficult, it is
one of the most important things you can do to help
your family in the event of your death. Make sure
your will reflects your current desires for the disposition
of your assets and names a guardian for minor children.
You should also consider a durable power of attorney,
which designates someone to control your financial
affairs if you become incapacitated, and a health
care proxy, which delegates health care decisions
when you are unable to make those decisions
REVIEW
YOUR PORTFOLIO
After the recent
market declines, you may be inclined to lean toward
a “safe” portfolio, i.e., one that doesn’t
contain stocks. But if you’re saving for goals
that are decades away, stocks probably should continue
to hold a major position in your portfolio. The lesson
we should learn from the recent market declines is
that our portfolios should be diversified. A properly
diversified portfolio will help protect its value
during market declines, while still offering higher
return potential.
TAKE ANOTHER
LOOK AT YOUR LIFE INSURANCE
You need to purchase
an appropriate amount of insurance to protect your
family in the event of your death. The amount needed
will depend on your current net worth, the lifestyle
you want to provide for your family, and your personal
circumstances and desires. Since your insurance needs
will change over time, assess your insurance coverage
periodically.
OBTAIN
SUFFICIENT DISABILITY INSURANCE
You should consider
disability insurance if your current assets won’t
support you until age 65. Many companies provide short-term
disability insurance which covers 100%of your salary
for three to six months. Long-term disability insurance
is typically less common and less generous. Thus,
even if you have long-term disability insurance at
work, you many want to obtain additional coverage.
Your available resources and disability benefits should
equal at least 60% of your pre-tax salary.
MAKE SURE YOU
HAVE AN EMERGENCY CASH RESERVE
Consider setting
aside at least three to six months of living expenses,
although the exact amount will depend on your age,
health, job outlook, and borrowing capacity. This
can help in case of a job layoff, short-term disability,
or large, unexpected expenditure.
Continued
Next Week…
