The end of the fourth quarter is a great time to evaluate the past year and begin looking towards 2018. Evaluating your finances is not quite as simple as looking at your year to date returns. There are a variety of measures to make sure your assets are working toward the goals that are important to you. Every person’s financial picture is different, but for the most part, the points below are the main areas to check in on each year.
The first item to consider is how well you are protecting yourself, and your family. Are your accounts and personal files secure? In cases of identity theft, is your account insured? Do you have enough insurance protecting your family’s assets? Are any of your old insurance policies approaching expiration? A professional should look at these issues more closely, but a quick once over can at least put your mind at ease.
Take a look at your 2017 plan and contemplate how much of what you wanted to accomplish was actually completed. Are the incomplete goals and tasks worth pursuing more attentively in 2018, or are they not as important to you as you had previously thought? Things like a job change, pay fluctuation, arrival or departure of children, entering retirement, or new major commitments are obvious red flags to revisit your finances, but often changes come from within instead. Perhaps you watched as a close friend dealt with an unfortunate situation and would now like to safeguard yourself, or maybe they started a business and are off to a hot start and you’d like to get more aggressive in your own plan. Change is a good thing, but it necessitates preparation. Take the time to be proactive rather than reactive.
When it comes to evaluating your investment portfolio, a simple look at the returns is more than likely not sufficient. A better indicator is how your investments are performing relative to its peers. How a fund stacks up compared to similar investments is a better indicator than its performance in any given year. In a bear market, even the smallest gains can often be considered a positive result.
Part of having a strong and viable financial plan is the continued work that must be put into it. If your money is on autopilot, someone is asleep at the wheel. Whether you hire a professional for these services or complete the basic tasks yourself, reviews should be completed at least once per year. The holidays are a busy time, but with the calendar year ending it is also the best time to take a look back at the year, and look ahead to 2018.