Some Basic Factors in Creating the Right Money Mix for You is part five of Money Tips for 2016 taken from the full episode of Right on the Money.
There are some basic talking points you need to address in your initial conversation with your financial advisor. These points can be the framework in your decision-making process on what assets you buy and why. It’s a good first step in creating a financial profile to help you determine the right money mix for you.
Creating a financial profile requires an “honest” assessment on your attitude toward money. Here’s an example of investor conflict often revealed after taking a risk tolerance test: The test results reveal a moderate conservative personality, but the investments in the 401(k) are dominated by aggressive growth funds. The test itself may not be scientific, but it should cause a conversation between the investor and the advisor.
A life-expectancy test can establish a timeline for basic assumptions for retirement planning or cost projections on long-term care and medical expenses. But, it’s also a road map for milestone events that occur in most of our lives, such as getting married, having children, funding college education, buying a home or planning for retirement.
Timeline planning around life events can trigger conversations between an investor and an advisor on financial goals. Once financial goals are established, you and your advisor can create planning strategies and tactics to prepare you for each life event. Then you can discuss financial products based on your risk tolerance to achieve your goals.
Syndicated financial columnist and talk show Steve Savant interviews Ted Meyer, RFC, IAR on Money Tips for 2016.