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Financial Lessons to Learn from 2003


Financial Lessons to Learn from 2003

Brandon Miller is a Financial Advisor with American Express Financial Advisors based in San Francisco, California and can be reached at brandon.j.miller@aexp.com    One of his specialties is comprehensive financial planning for gay and lesbian individuals and couples.

Brandon Miller has a website that can be found at http://gayfinancialadvisors.com/California.htm

How did last year’s economy and significant financial events affect your investing strategies and, ultimately, your “personal economy,” or your personal financial situation?  Following are some lessons to be learned from the past year. 

Take the Fear out of the Fall

In 2003, many investors felt burned by the bear market and pulled out of their investments. If you were one of these investors, chances are you missed a big opportunity to rebound.  Instead of trying to time the market, consider some basic rules:

  1. Know your timeframe.  If you are in the market for longer than five years, you can afford to ride out a down cycle.
  2. Stay diversified.  If your assets are spread out over different classes and sectors, you will be better positioned to weather the storms.
  3. Rebalance regularly.  At minimum, rebalance every year. You don’t want to be overexposed in a class of securities.

4.  Select funds with care.  Find solid performers with modest fees and toss the losers.

Increase Emergency Funds

The 2003 unemployment rates were a sobering reminder of how important it is to have an emergency fund.  The number of long-term unemployed hit a 10 year high in the last quarter of 2003.  To be safe you should have a cash reserve equal to six months of expenses in an account where it is easily accessible.

Don’t Overinvest in Your Company Stock

If we should have learned anything from the plethora of recent corporate scandals, it was to take your 401(k) off “autopilot” and make sure you are not overly invested in company stocks.  Many financial advisors recommend limiting your holdings in your company stock to 20% or less. 

Get Help

A qualified financial advisor can help you create a comprehensive financial plan for 2004 that addresses these topics as well as your specific risk tolerance, goals and objectives.

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      This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. The views expressed may not be suitable for every situation.

 

American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.

 

Brandon Miller has a website that can be found at http://gayfinancialadvisors.com/California.htm