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New Year, New Opportunity

New Year, New Opportunity

February 24, 2022
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New Year, New Opportunity

By Peter T. Waldron

Managing Partner of Waldron Partners

“Write it on your heart that every day is the best day in the year.” - Ralph Waldo Emerson

                With every day that passes, time falls behind us as our past, and as every new day arrives, so does our future. While we can’t control time, we can bear witness to its magnificence. Although most wouldn’t define last year as magnificent, humans throughout time have shown that they — we — can persevere against adversity and surmount impossibilities. There are impossibilities all around us, and as the year turns over and we embark on a new one, I want to impart several tips to help you make the upcoming year as magnificent as possible.

FINANCIAL PLANNING TIPS

  • BUDGET
    • Instead of creating a budget that’s broken down to the penny, create a plan that shows how much you will spend in total each month. Then make sure that you save between three and twelve months of that amount. For example: if your monthly budget number is $15,000, then keep $45,000 to $180,000 in your savings account. This will reduce your anxiety and stress around money because you’ll know those savings are there in case you need them. There are many factors that go into determining whether you should save three, six, or twelve months’ worth of money, including your profession, net worth, income sources, and emotional index.

 

  • AUDIT
    • Set aside time each year to review your estate planning documents to ensure they meet your goals. The trustee of your trust is the person you believe will have the best results in making informed financial decisions in your absence (this person can also serve as your financial power of attorney). The guardian for your children is best defined as a replacement parent; ideally, they share your values and parenting style. As for your health care power of attorney, choose someone who can understand medical information and make informed decisions regarding your healthcare if you are unable to do so.  It is also important to ensure that you have everything titled correctly and that your beneficiary designations are accurate.

 

  • BENCHMARK
    • Understanding how your investments are doing can be difficult. Some people look at the bottom line and if it is bigger than the top line they assume that they are ahead. Seems simple and unmistakable. But how do you know how you did? Was your investment portfolio’s performance good, bad, or just okay? A tool that many investors use is called index comparison, and it can be useful in judging one’s investment performance. One example of an index is the S&P 500, and while this is not a bad metric, keep in mind that it might not be 100% accurate. If you have a portfolio of half stocks and half bonds, and the S&P 500 is all stocks, your comparison in this case would be apples to oranges.   

 

  • CREATE YOUR MAP
    • Write down your short, intermediate, and long-term financial goals. Figure out the who, what, where, when, and why of each goal. The intention of each should be clearly outlined and contingencies should be considered. Think of it like a map for your financial future. It is said that every ship that leaves the harbor with a captain and a map will most likely get to its destination (even with storms), while a ship without a captain or a map… well, those ships tend to be less fortunate.

 

  • DISCIPLINE
    • A strong indicator of success with any activity is the ability to stay disciplined in your approach. In fact, with planning this is the greatest indicator of all. Set time aside every thirty to ninety days to review the items above. This habit will allow you to track variations and adjust before you veer off course. In air navigation, the 1 in 60 rule states that if a pilot has traveled sixty miles then an error in track of one mile is approximately a 1° error in heading and proportionately more for larger errors. If you apply that rule to investments, a 1% difference in your return over thirty years, assuming you are investing $1,000,000, would be $374,848. And what if your error is more than 1%...?

It is my hope that these tips give you a leg up against the turmoil and tumult of 2021. While you can’t control everything, these recommendations should assist you in gaining control over some aspects of your life and guiding you to a successful and profitable financial future. I hope you and your family have a safe and prosperous year. 

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” - Ayn Rand

PLEASE CONTACT PETER WALDRON TO SCHEDULE A COMPLIMENTARY REVIEW OF YOUR FINANCIAL SITUATION: 925-786-7686 or peter.waldron@lfg.com

Peter T. Waldron: California Insurance License #0E47827

Peter T. Waldron is a registered representative of Lincoln Financial Advisors, a broker/dealer, member SIPC, and offers investment advisory services through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor, Waldron Partners, 3201 Danville Blvd., Suite 190 PO Box 528, Alamo, CA 94507.  Waldron Partners is not an affiliate of Lincoln Financial Advisors. Insurance is offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc. and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors Corp. for its representatives and their clients. CRN-3377517-121820