When the markets and the economy are volatile and trending down, as they tend to do from time to time, it is easy to feel helpless. But creating a solid financial foundation can help you gain control of your investments and possibly avoid mistakes that can sabotage your portfolio.

  1. YOUR NET WORTH – Having a current picture of your finances is an important first step in building a solid foundation. By determining your net worth, you can track your progress toward your goals. It will help you refocus on your short and longer-term goals. To calculate your net worth, list all your assets, including bank and investment accounts, real estate, retirement plans, business interests, etc., then subtract your liabilities, such as your mortgage, credit card debt, loans, etc. The difference is your net worth. If you are unhappy with the progress over time, consult with your advisor and reevaluate your goals and strategies to see what you can do to improve your situation.
  2. DRIFTING – Ever start a trip without a destination? Not sure where it is, the best way to move forward, how long to get there, or to evaluate how close you are? Setting specific goals can help you attain your goals and pinpoint specific steps to facilitate your progress. Prioritize your goals and look to change them as the journey through life changes. Keep in mind that the goals you have now will probably change over time, so be flexible and adaptable. Revisit your goals periodically and revise them when necessary.  Your advisor can help you set reasonable goals, see your overall picture, and assist you to make sure you are maximizing what you need to accomplish.
  3. MAKE IT PERSONAL – You cannot control what happens in the economy or financial markets, but you can control your own behavior. Instead of worrying about whether the market is in an up or down cycle or timing investments, think about the things you can do that could make a difference, such as investing money on a regular basis, reducing spending, paying down debt, or reevaluating your portfolio’s asset allocation. Your long-term financial results are heavily dependent upon what you can control.

It is always good to have a life plan. Working with an advisor keeps you focused, on track, prevents you from making major mistakes, instills peace of mind and accountability, and increases the probability of you attaining your goals.

About the Author: Jan Kowal, CFP®

Jan’s passion for helping clients work towards their financial goals began almost 40 years ago. His planning is based on personal relationships and a true understanding of clients and their goals. Jan graduated from George Washington University with a BBA in Accounting and an MBA in Finance and Investments. He has been a Certified Financial Planner since 1984. Jan enjoys music, travel, cooking, and family time.

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