Start 2003 with a Review of Your Financial Goals and Strateg

Tonja Sepulveda

With any sound financial plan, a comprehensive review of your goals and strategies are a significant part of its success.
With every New Year there are resolutions made to live healthier, wiser, and fuller lives. This same enthusiasm should also apply to reviewing your financial goals. With any sound financial plan, a comprehensive review of your goals and strategies are a significant part of its success. What better time than at the beginning of a new year to reevaluate these goals and strategies to ensure that you are still on track?

Meeting your financial goals doesn’t have to be cumbersome. Consider the following steps:

- Set measurable financial goals.

Set specific targets. What do you want to achieve and when? Instead of saying you want to be "comfortable" when you retire or that you want your children to attend "good" schools, you need to quantify what "comfortable" and "good" mean so that you'll know when you've reached your goals.

- Use qualified advisors to provide guidance.

Seek out qualified advisors to assist you in defining your goals and establishing strategies to meet those goals. It may be a financial planner, attorney, or accountant who can provide guidance. Make sure they are qualified and that you can comfortably work with them.

- Understand how your financial decisions are interrelated.

Each financial decision you make can affect several other aspects of your life. Your investment decisions may have tax consequences that may also affect your estate plan. A decision about your child’s education may affect when and how you meet your retirement goals. Remember that all your financial decisions are interrelated.

- Continually re-evaluate your financial goals.

Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial goals as time goes by to reflect these changes so that you stay on track with your long-term goals.

Whether your goals are retirement security, funding children’s education, increasing current income, or reducing taxes and passing accumulated wealth to your family, the strategies you’ve put in place to meet these goals need to be reviewed and possibly revised. Here are some key areas to assess:

- Evaluate your investment plan.

The New Year is a great time to make sure your current investment plan is still on track, but more importantly to make the necessary changes if it isn't. If your personal financial situation or market conditions have changed, your portfolio may reveal that your asset allocation has drifted from your targeted levels. If this is the case, rebalancing your portfolio’s asset mix of stocks, bonds and cash may be necessary.

This also an ideal time to evaluate the performance of each of your securities against a benchmark- an index that measures the average performance of a representative group of securities, such as the Dow Jones Industrial Average, S&P 500 or the NASDAQ.

- Determine if your insurance needs are still being met.

Insurance serves to protect your family and your estate. Start your New Year off by measuring your current insurance policies against your needs. A growing family, caring for an aging relative and income changes all require you to assess if your insurance coverage is still adequate. Also, re-evaluate your beneficiary designation and make appropriate changes. The insurance industry continues to change and introduce new products, some of which may be better options than your current coverage.

- Evaluate your tax situation and strategy.

Check your deductions, tax law changes, and life changes. Review your assets for capital gains and/or losses. Consider gifting property or cash to charity to create an income (and estate) tax deduction. Gifting appreciated stock to charity also allows for an income tax deduction, but you also avoid paying capital gains taxes on the appreciation. If you don't need current income from your investments, see if you are paying unnecessary taxes on earnings from them. There are very good tax-advantaged alternatives available for college and retirement savings. It is well known that tax-deferred investing leads to greater growth than taxable growth. However, there may be some restrictions, which you should be aware of. Talk to your tax advisor.

- Review your estate plan.

Your estate plan documents should be reviewed once a year to see if they still make sense under your current circumstances.

Estate plans are created for a multitude of reasons including the desire to avoid probate, control the distribution of assets, and to minimize estate taxes. The typical estate plan includes a will, one or more trusts, powers of attorney, life insurance, and a program of gifts and charitable donations. Commonly, an estate plan is amended several times every few years, as a result of changes in circumstances, tax law changes, or changes of heart.

Recent 2001 tax law changes created many new opportunities for larger savings of estate taxes, but estate plans need to be reviewed and possibly revised to take advantage of those tax benefits.

With the New Year upon us, use your renewed energy to stay on top of your financial goals. Have a safe and prosperous New Year.

About the Author

Tonja Sepulveda is a Certified Financial PLanner and Vice President of Marc J. Lane Investment Management, Inc. in Chicago, Illinois. She has a Bachelor's degree in Business Management from the University of Texas in San Antonio. She obtained her Certified Financial Planner designation in 2002 and became a Certified Fund Specialist in 2000. She also holds the National Association of Securities Dealers Series 7 & 63 Licenses, and a Life and Health Insurance License. Prior to joining Marc J. Lane Investment Management, Inc., she worked for Retirement Planning Strategies, Ltd. as a Client Service Manager, and American Funds Group as a Senior Shareholder Service Representative.