Creating Financial Plans

Need a Planner or a Manager?

If the terms “financial planner” and “investment manager” seem interchangeable to you, know that many people — even financial professionals — goof in differentiating. Understand the difference to maximize your financial well-being, and here’s how.

Confusion reigns because the terms don’t just describe job titles; they refer to distinct parts of the integrated financial processes of financial planning and investment management.

Passive Investing, Actively, Pt. 2

While passive investing – meaning, using index funds – is the smartest course, you have to actively oversee your holdings. Circumstances change and not every index fund is a keeper.

Continued from our initial article on this recently, here are the remaining keys to help fine-tune your core passive investment strategy for optimum success.

Face Your Financial Fears

As a child you pulled the blanket over your head to ward off the monsters. Your financial future is no monster – if you think ahead – but some people still insist on pulling up their blanket. Here are some sobering numbers and ways to get planning while you still have time.

For its “Fear of Financial Planning Consumer Study,” Harris Interactive surveyed 783 adults with at least $100,000 in investable assets. Some of the results scare any financial planner:

Passive Investing, Actively

Index funds, which track the entire market or portions of it, do best for investors over time. These funds are called passively managed, because their components get selected automatically, according to index movements. But you shouldn’t be passive about managing them. You must be very active.

A fundamental principle I preach is that having a core of passively managed mutual funds is the foundation of successful long-term wealth building. I practice that principle, as well: About 75% of the securities in my personal portfolio are passively selected.

Retirement Plans: A Long Hike

Many eventual retirees actually save enough, many only feel they save enough. Some lag and fall even further behind on the long trek of retirement planning. Here’s who they are and how they can catch up.

Mark Twain claimed British statesman Benjamin Disraeli said there are three kinds of untruths: “Lies, damn lies and statistics.” As a lifelong personal finance junkie, I qualify that yes, some statistics are distractions.

Plan While You’re Young

Watching financial advisors put their own house in order teaches you about building your own plan. You’re never too young, and here’s why.

My husband Brian and I married two years ago. I went through our finances, combined accounts, changed names, updated beneficiaries and made a list of items to complete: wills, powers of attorney and additional life insurance for me.

Why Poor Planning = Disaster

Too many people think retirement planning is simple. Then years later, they find they don’t have enough money to retire on. How did that happen?

They think you just throw some money into a savings account, with little regard for the account’s tax status, and put little thought into the investments. After all, the market always goes up, right? They assume if they save X amount of dollars today, then they should be fine 10 or 30 years down the road.

Fear: Biggest Threat to a Plan

The only thing your goals, life and financial plan have to fear is fear itself. Here’s how to keep your perspective.

Steve Jobs, founder and brains behind Apple (AAPL) endured a long battle with pancreatic cancer. The following is a Steve Jobs quote toward the end:

Keep in Touch With Advisors

You’ve met your financial planner to discuss your goals, written up your financial plan and signed on all the dotted lines to transfer your accounts. Congratulations, you have a financial planner. From new babies to a new inheritance, you now have many reasons to contact that professional. Here’s how to stay in contact.

(This is the last of four articles on what you can expect in the process of financial planning.)

Agility in Your Investing

Often people see their financial plans as fixed in stone. You don’t want to wander too far off your financial goals, yet goals change. Your plan must evolve with your financial objectives.

If you talk to a financial planner, the process usually goes like this:

Step 1. Determine your goals.

Step 2. Determine your risk tolerance, or comfort with potential losses in the market.

Step 3. Design a portfolio, within your risk tolerance, to achieve your goals.


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