Football Season is Here: Avoid These Fiscal Fumbles
Nothing’s more frustrating to a football fan than watching a terrific play turn into an epic disaster because someone fumbled the ball. Financial fumbles can be just as maddening, especially when you get really close to most people’s end zone: retirement.
You know it is fall, when Saturdays are all about college football and Sunday brings the NFL to living rooms across the country. Now that football season is underway, twincities.com is expanding on the football metaphor with this personal finance article, “Your Money: 4 financial “fumbles” to avoid.”
- No Game Plan. Pro football players and their coaches spend hours looking at tape of themselves and their opponents to prepare for game day. Reviewing past games lets them more effectively and efficiently prepare for the next Sunday. The same is true with financial planning: reviewing past performance of certain asset classes and indexes, lets you forecast potential returns for your investments. That can help to dictate an appropriate withdrawal rate that works with your time frame.
- Too Many “Hail Marys.” A Hail Mary or the long pass at the end of the game for a score is thrilling, but its success rate is 50-50 at best. Think of a Hail Mary pass like pursuing the hot stock—it can be fun to watch it go up, but its consistency is all over the board. It’s not a strategy for every play, if you want to see long-term, sustained success. A diversified portfolio should instead be thought of as a well-planned game plan to take you down the field to the end zone. You’ll mix up runs, short passes and a few long bombs in an attempt to outsmart the defense. Your portfolio should also have a mix of asset classes and risk factors to withstand any market volatility.
- No Backup or Second-String Team. Every position on an NFL team has a backup, in case of injury or other circumstances. The same should hold true for your financial plan. While it may appear to be rock solid, can it stand a “sack” from another recession? Create a contingency plan for every piece of your financial picture. You should be just as confident in your contingency plan, as in your primary financial plan.
- No Specialists on Your Team. There is a reason why NFL teams have 53-man rosters and are constantly on the lookout for specialized positions. A wide receiver has different skills than a defensive end or a safety, and a punter has different skills than a quarterback, but they’re all essential for success. With your finances, you should have specialist knowledge in every area: Social Security, investment management, financial planning, estate planning, insurance and more.
You’ll have an even better chance of avoiding these financial fumbles, if you have a great coach, by which we mean an experienced estate planning attorney who can help you create a game plan for your family’s future.
Reference: twincities.com (September 9, 2017) “Your Money: 4 financial “fumbles” to avoid”