As the holiday season draws near, most people aren’t thinking too much about their long-term financial plans. That might be why October was selected as National Financial Planning Month- a time to reflect on the future before things get busy later in the year. Here are three things to think about if you do have a few moments between now and your next appointment with your advisor here at Telarray.
Think about a Budget
Markets can provide meaningful returns in the long run, but no single decision can guarantee a secure future more than getting spending under control. How soon you can retire depends not on your income or spending alone but rather their relationship to each other. An average family living modestly and saving 30% of their income will be able to retire relatively quickly, since they’re managing to live on 70% of their modest income. Someone making a million dollars a year and spending all of it will never be able to retire, since they’re building up nothing for the future and becoming accustomed to a million dollar a year lifestyle! One of the most important relationships in personal finance is the simple fact that (1 – savings rate = spending rate). In other words, every dollar you save is a dollar you’re not spending.
Understand Yields and Mortgages
Yields have changed a great deal in a short time. Now there is increased opportunity in the form of more attractive bond yields, but also challenges, primarily in the form of higher mortgage rates. Moving to a new house probably feels a lot less attractive than it did even a few months ago. Staying where you are and paying off your mortgage early might feel good, but now more than ever it’s worth considering if prepaying a low-rate mortgage makes sense. We’re happy to look at this for you as it applies to your specific personal situation in your next Observatory session.
Think about insurance
Here at Telarray, we don’t sell insurance, but we acknowledge it plays a critical role in our lives. Pretty much everyone needs auto insurance and homeowners or renters coverage, for example. The question of other insurance, including life insurance, is a harder question to answer. At your Observatory sessions, we can always consider if your life insurance coverage is appropriate, or even if you need any at all. Since we don’t sell insurance or get any kind of financial incentive from recommending insurance, we can provide a rare service in the insurance world- true, useful, and completely unbiased advice.