Being immersed in the business of finance 5 days a week keeps me rather busy during business hours. As an escape, in the evening I admit I turn to the TV for a diversion: old sitcoms are my go-to for a laugh and a change of pace. It seems there are some that you can watch over and over, laugh like I never saw it even though I've seen the episode many times. Watching a Two and a Half Men episode recently had Charley complaining to his mother how she screwed him up and will never be normal again... not a fresh storyline, but a funny one. Evelyn was doing yoga at the time... a pose called the downward dog that had Charley averting his eyes, complaining wildly. Nothing I hadn't seen before, still funny with the same, reliable outcome. After the show was over, it had me thinking: how many times will I see the same episode, the same plot line, with the same ending? Why would I think the ending would be any different?
Let's apply that theory to real life, my life. How many incidences do I have that play out the same, but to expect a different outcome? How does Charley's aversion to his mother set an example for me to create a scenario that changes the outcome? Think about the first time you signed up for your retirement plan at work, or started your IRA: have you reviewed it at all since you started it? The world is an evolving place, changing daily based on present events. While there are few things that can be counted on, you can be guaranteed (a word we are forbidden to use in my business) one thing: the markets will either go down or go up. Which was: I can't tell you, but I can say they will go down or go up. With that, managing your portfolio should or could be adjusted to account for world events, political surprises, economic trends, or just changes in general. What I've experienced though, by meeting with thousands of folks, is that many people don't review their portfolio and make changes when deemed necessary. While I can't tell you here when to adjust, I can say that periodic adjusting, or rebalancing, is part of managing money. Keeping on top of your fortune is your responsibility, regardless of who makes your financial decisions- don't let it get away from you.
Estate planning- the process in part of deciding how your holdings will be distributed, is decided by your will and beneficiary designations. Life changes- have you updated your wishes? Marital changes, new children and grandchildren, health issues, location changes and other issues may dictate changes in who you want to leave your fortune to. I've met with folks who dutifully did their wills... 40 years ago... and haven't updated them since. It's important to be sure that the people you name in your will are still alive and well and can serve their job as executor or guardian. You may be leaving your estate to people who have long been deceased: a fine gesture, but doubtful they need it. You may be leaving money to someone you don't talk to anymore: good for them, not so good for you. Perhaps it's time to dust off those old documents (if you have them) and update them.
Insurance policies are not something we think about every day. Just like the markets, insurance coverages change. When was the last time you looked at the declared value of your home and compared it to the fair market value and replacement value? (AHA! Got you there!) When was the last time you looked at the death benefits of your life insurance to see if it is enough to have your loved ones continue to live it the manner they have been accustomed to? Remember: the theory in estate planning is for the remaining family members to live on the interest generated by the lump sum of the death benefit, not ON the principal. If you have a million dollars of death benefit at 5%, you can consider the policy to afford $50,000 a year to your remaining family members. While a million dollars sound like a fortune, think $50,000, not a million: is it enough or too much? Having too much insurance means paying more than you need to: be sure to evaluate how much you need and adjust accordingly.
The same can be said for so many things we surround ourselves with daily: getting in the car every day expecting it to start when we don't service it, expecting clean clothes in the closet when we don't do the laundry, or expecting the front lawn to always look beautiful when we don't mow it. Things change, and if we don't keep them in check, review them periodically, and do what is necessary to do what we can to produce a positive outcome, the same things will happen over and over and over again... just ask Charley Harper...