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Financial Planning During Uncertain Times Part 2 Thumbnail

Financial Planning During Uncertain Times Part 2


One year ago, almost to the day, we published a newsletter about Financial Planning during uncertain times and 5 tips to reduce stress.  Today, with concerns and market volatility still present, we want to remind you of these tips (https://mybuckingham.com/insights/financial-planning-during-uncertain-times-5-tips-to-reduce-stress) and present you with 4 more to consider.

Tip #1:  Review your Bank Accounts 

With interest rates increasing and your savings accounts finally seeing some positive movement, we want to remind investors to be mindful of FDIC insurance limits and avoid balances that may exceed these levels.  FDIC’s standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. More details can be found here: https://www.fdic.gov/resources/deposit-insurance/ .   Additionally, if you are not seeing increases in your interest rate, you may want to check around to see if there is a better rate available. Keep Tip #1 from last year in mind, by maintaining an emergency fund and keeping your resources accessible and flexible.    

Tip #2:  Take Advantage of Tax Planning

Taxes may be top of mind for many of you this month and next as you complete your tax returns.  However, tax planning is necessary year-round and is especially important as a part of managing your investment portfolio and within retirement planning. These tax strategies include loss harvesting, asset location optimization, conscious rebalancing, implementing distribution strategies, and others to maximize resources up to and thru retirement.  Taking advantage of this planning and its benefits requires advisors that understand how each of these pieces connect, and at Buckingham Advisors our departments work together to create integrated tax strategies for our clients.  Tax planning can maximize long-term rewards and reduce short-term concerns. 

Tip #3: Maintain Diversification 

Avoid letting individual positions or sector exposures get too large.  We suggest that you target keeping individual stock positions between 2% and 4% of your equities and trim them when they exceed 5%.  Also, be wary when your overall exposure to one sector of the economy is greater than 3% of that sector’s weighing in the S&P 500.  Don’t forget to consider exposure you may have in your retirement account to company stock and any stock options.  Keeping these allocations in check can help reduce portfolio volatility and your stress level.  

Tip #4:  Work with a Financial Planner who will Put the Pieces Together for You

Managing all of these pieces on your own can be stressful (and feel like a full-time job). Look to work with a financial planner who can consider all of the pieces of your financial picture and will provide strategy and guidance to you along the way.  

Having a team who works with you to manage your finances during uncertain times can help reduce stress and improve outcomes.   Please contact us if we can provide any assistance to you, your family, or friends during this time and in the future.