FROM THE BLOG

Ask David: What are the Top Considerations to Make Regarding My Financial Decisions?

Sifting through your financial decisions requires attention to detail and management of more than a few moving pieces. Today, we’re talking with advisor David Hemler, MS, MPAS®, CFP® about some of the primary considerations to make when thinking through financial decisions, big and small.

Consideration 1: Risk

Are you considering doing something with some of your money? What’s the risk? Everything has a risk and usually if something sounds too good to be true, it often is.

Your financial advisor can help you navigate the potential risks associated with your financial decisions, whether you’re planning to make a large purchase in the near future or are considering your retirement savings plans.

Consideration 2: Taxes

Many folks who have gotten to know me have likely heard me say; “risk and taxes, risk and taxes…” These are two main factors of working in financial planning.

While paying taxes is a certainty, overpaying on your taxes doesn’t have to be. Financial planning and maintaining a cohesive tax strategy can prevent you from paying too much in taxes on your investments, returns, and withdrawals. Your financial advisor can be an invaluable partner in determining a tax strategy that may save you money over time.

Consideration 3: Allocation

Allocation refers to the areas where you have your wealth allocated. Most people consider their stocks, bonds, cash and real estate investments as the primary areas where their assets are concentrated. But it’s important to know where your assets are distributed and how this lines up with your risk tolerance or risk acceptance and tax strategy.

There is no one size fits all approach to allocation planning, and it’s important to talk to your financial advisor about different ways you might allocate your wealth. Age-based investing and general rules of thumb come into play here, too, so it’s a good idea to work with an advisor who has a solid understanding of your situation and goals, as well as the investment options you have before you.

Consideration 4: Diversification

In some ways, diversification is similar to allocation, but with a little more nuance. You can think of allocation as the way your assets are distributed throughout larger baskets and diversification as the components that make up those baskets.

For example, if you have stock investments, you wouldn’t want to put all of your investment into a single stock. Instead, you’d split your investments between various stocks and fund options to build a more robust portfolio.

More diversity in your financial makeup makes your finances more likely to withstand market fluctuations and varying risk levels across your asset allocations.

Consideration 5: Fees

There are fees associated with many of your investments and financial activities. Sometimes, it can seem like choosing a lower fee investment is better than a higher fee one, if the returns from each are equal.

But, as with many things in finance, things aren’t always as they appear. The best way to avoid tying your finances up in unnecessary fees is to work with an advisor who can help you to understand the various fees, including hidden fees, that your financial decisions might incur.

Consideration 6: Faith

Lastly, one of the last things to consider in making your financial decisions is your faith in the decisions that you’ve made. While emotional investing isn’t the ticket to reaching your goals, having faith in the process is an essential part of managing your wealth.

When you consider a dollar, think about how you might invest it, how long it can stay there, and how ups and downs might bring you a return or loss on that single dollar. Now, apply this principle to your financial decision making process and you’ll start to see how the faith aspect works when it comes to wealth management.

Do you have money questions? Contact Puckett & Sturgill Financial Group to learn about how we can help you make informed financial decisions with confidence. Be well and prosper!

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.