A financial checkup is a lot like getting a physical, getting your oil changed, or flossing. They’re preventative, routine things we all do to stay healthy, keep our cars running, or keep our smiles clear of cavities. In the Fidelity Viewpoints® article "Five things to review annually," Fidelity recommends getting a financial checkup at least once annually. Here’s why.
- Your investing goals—or investments—may have shifted.
Let’s say you just had a baby or bought a new house. Those major life changes affect more than your sleep schedule and your address. Major changes in your life can have an impact on your investing strategy, too. That’s why it’s so important to do a check-in from time to time, and see if your mix of investments still aligns with your goals.
- You could be paying too much in taxes.
Another reason an annual review is a smart idea? One word: taxes. Here’s what we mean. You may actually be able to reduce the amount you’re paying in taxes by contributing more to a tax-advantaged account, like a 401(k) or IRA. Not sure which is right for your situation? Give us a call and we’ll talk you through it.
- You don’t have the whole retirement thing figured out yet.
While it may seem a long way off, someday you’re going to want to quit the 9 to 5 and go on vacation for good. You don’t necessarily need to know what you’re going to do when you retire. But having a general idea around when you want to retire can help you put a smart plan in place and determine how much you’ll need to save. Wondering how you’re going to save for retirement while also factoring in larger purchases like a car or a home? This article can help you prioritize.
- You may not have enough insurance.
You probably have insurance, but how do you know if you have the right amount and type? Because your life is constantly changing, it can be a good idea to evaluate your needs annually to make sure you’re prepared for the unexpected. Typically, people with families tend to increase their life insurance when their children are young, but once the kids move out of the house, they tend to reduce their coverage. The same applies for disability insurance. You should consider reviewing your coverage annually, whether you have a family or not.
- Your estate plan needs updating—or, whoops, you don’t have one yet.
Having an estate plan—and keeping it updated—is an important way to help protect your family in the event that something happens to you. Major life events like marriage, divorce, and the birth of a child are all smart times to update your estate plan and make sure the right people know where to find the right documents. But you can also use your annual review to make sure your estate plan reflects your current family and financial situation, and that you’re complying with the latest estate and tax laws. If you haven’t created an estate plan yet, here are some tips to help you get started.
THE BOTTOM LINE
Like going to the dentist, checking in on your investments annually can be a smart idea. Unlike the dentist, there’s no novocaine required. How painless is that?
Take the next step
Give us a call with any questions about your investments.