Bob O'Brien
Head Instructor
bobrien@mywealth.com
I often get a kick out of people that talk about investing and stocks and yet say things that tip me off that they do not have their own financial house in order. Don’t get condemned if your financial house is not in great shape right now, because the national statistics show proof that most people do not have theirs in order as well. So you are not alone!
What is important is that you are trying to get your finances together, and that you are learning from your past. It is important for you to recognize that it is highly unlikely that you will be able to recognize a great investment opportunity if your own financial house is anything less than “pretty well organized.”
If you are not adequately funding your savings getting the proper insurances and covering all your financial bases, then you don’t have a base with which to build an investment portfolio. In other words, if your house is in order, then you will likely learn to recognize corporations that have their financial house in order too.
Remember you are like a small enterprise yourself, and you will not be able to accurately judge larger enterprises like publicly traded stocks if you are not managing your own financial affairs properly.
Here are several tips to help you stick to the basics.
- Track your budget and net worth (your net worth = your personal balance sheet). These are the foundation of any individual, family or corporation. The idea is to have positive cash flow and your net worth is the report card of that will shows this. Taking a look at these at least annually is a must!
- Make sure you have adequate insurance coverage…which would be life, health, disability, property and an umbrella liability policy. Unfortunately, bad things can happen and you need to make certain that you are financially prepared if they do.
- Get a Financial Plan….This is how you will increase your net worth. Remember no one can work forever, so building wealth for retirement is a necessity. Make certain you have a Retirement Plan
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- If you don’t have the time to follow the markets, keep your investment strategy basic. Stick to using target, age based mutual funds, or balanced mutual funds. If you have time to rebalance your portfolio yourself (which should not be that time consuming) you will save money on fees and expenses in many cases. Click here for more details on this!
These are just several points and there are even more. However, what is really important is that you are consistently seeking more education in regards to your personal finances and make certain that you are taking action to improve your finances. It is an ongoing, lifelong process!
Please feel free to leave your comments below or e –mail me a personal finance question!
Sincerely,
Bob O’Brien
Sr. Instructor
