Spring is in the air, and it not only signifies good weather – it’s also a time many of us take to clean up, organize, and rejuvenate.
This shouldn’t just apply to your personal life or home, however. Even if you have a well-laid out investment plan, taking the time to review and tweak it can be just as (if not more) fruitful as a home cleaning.
Without further ado, here are 3 steps you can take to spring clean your finances:
Review your risk tolerance and asset allocation
As I’ve said many times, your ability to stomach temporary volatility largely determines your success as a long-term investor.
However, that doesn’t mean you have to wait until you’re in the moment to realize you’re unable to tolerate risk. Instead of waiting until the next big stock market drop, spring clean your finances by looking at possibilities for your portfolio now.
If you haven’t already, forecast what could happen if market conditions turn sour. Additionally, take a realistic look back at your reactions during stock market drops in the last year. During the Brexit news, for instance, did you sell some of your equities?
You don’t (and probably shouldn’t) switch to all bonds, but you should find an asset allocation and investment plan you can realistically stick with.
Check in with your advisor
There’s a lot that can change in a year (or less) in your own life. That’s why when you spring clean your finances; you should include a check-up with your advisor.
This financial checkup is really more of a check-in; a chance to be reassured about where you’re going, and to make any tweaks if that destination changes. If you’re planning to have a child, for instance, you can proactive steps now to meet those financial needs.
Clear out the “clutter” to up your contributions
Just like you remove clutter from your home, there’s a great opportunity to clean up financial disorder when you spring clean your finances. There is likely waste in your budget that can be cleared up and utilized in better ways.
Contributing more to your tax-advantaged retirement accounts, for example, can be immensely beneficial. There is likely some wasteful wiggle room (like multiple online subscriptions) that can be cleared out to maximize those contributions.
Even if you can’t make the maximum contributions, every dollar counts. The extra amount might seem small, but after utilizing tax-free growth and compounding, it can become a fortune by the time retirement rolls around.
Find out more ways to spring clean your finances
At LexION Capital, we encourage and welcome our clients to maintain an ongoing dialogue, so they not only know where they’re going financially, but they also can account for any changes in their financial life. If you’d like to learn more about how we can help you spring clean your finances, let’s have a conversation today.