In last week’s blog, How Often Should I Review My Investments?, we discussed that the best strategy is reviewing your investments no more than twice per year.
But in addition to determining if your investment mix still makes sense for your age, selling investments that are throwing your allocation out of whack, and reinvesting those funds to bring your investment mix back where you want it – are there other things you should be doing during your annual/bi-annual review?
The answer is yes – there are other things to consider during your investment review.
Ask yourself these 3 questions as you do your financial review:
Am I protecting my income?
You’ve worked hard and want to protect your income, so now is the time to evaluate your insurance needs to make sure you have the right amount/type of insurance to cover unforeseen circumstances.
First, life insurance. If your family is growing, it might make sense to increase your life insurance policy. If your children have reached adulthood, however, you might feel that less life insurance is ok now.
Next, health insurance. The older you get, the more crucial health insurance is. Make sure you have enough to cover, at the very least, a catastrophic life event.
Finally, check your insurance beneficiaries to ensure they’re up to date.
Am I preserving my assets?
Do you have an estate plan that reflects your family status and financial situation? Is it updated to reflect the latest estate and tax laws? Do beneficiaries and other key people know where to find relevant documents and information?
The answer to all of the above questions should be “yes.”
Writing a will, appointing a health care proxy and/or power of attorney, choosing beneficiaries, etc. can be uncomfortable, but consider the alternative: someone else making the decisions for you and possibly undoing all your hard work.
How does my plan affect my family?
You’re probably not just planning for yourself – you’d probably also like to provide for the people you love, such as parents, children, or grandchildren. An annual review should prioritize financial decisions you need to make to support your family across the generations.
Now is also the time to consider life changes – marriage, divorce, birth, and death are events that affect investment planning, along with college savings, caregiving responsibilities, health, inheritances, and more.
Yes, this is a lot of ground to cover just once or twice a year, and yes, it might seem overwhelming – but considering the time and hard work you’ve put into building and protecting your investments, an annual review is well worth the effort.