Rebalancing Your Assets

If you are regularly investing, then you’re doing good things for your finances and for yourself in general! So many people in today’s world don’t take the time to invest, which means that they don’t allow their money to grow and work for them in all the ways that it could.

However, just investing your money and then stepping back and not being involved is not the answer! After you have made investments, you’ll want to check up on them regularly to see how they’re performing. You may want to get rid of some investments, take on some new ones, and also make adjustments and re-balance investments in order to minimize risks.  

Regularly checking in on investments and making changes as needed is all part of being an investor, but knowing what changes to make and when can be a bit tricky, especially if it’s all new to you. That’s why we’ve provided some simple tips for re-balancing your assets smartly.

Tip #1: Aim for an Asset Allocation You Feel Good About

Your asset allocations will often shift and change as investments grow and change themselves. Thus, sometimes, you end up with an asset allocation you’re not entirely comfortable with. This could also happen through poor planning. Whatever the reason, if you end up with an asset allocation that’s too risky for you or otherwise makes you unhappy, some re-balancing is definitely in order.

When you re-balance for this reason, do so with the goal of developing an asset allocation you feel comfortable with and that doesn’t involve too much risk. If you’re unsure how to drive your risk down, then you may want to speak with an investment adviser for assistance.

Tip #2: Think About Your Taxes

It’s important for you to remember that many of the decisions you’ll make during re-balancing will have some kind of an effect on your taxes. For example, when you sell taxable assets that have increased in value, you’ll probably have to pay a capital gains tax.

You can minimize such taxes by selling off lower performing securities or choosing to hang on to certain assets for longer. A good asset management adviser can also supply you with more strategies for getting your assets back in balance without driving up your tax bill.

Tip #3: Time it Right

Finally, it’s important to understand that it is extremely possible to re-balance your assets TOO much. If you panic and re-balance every time there is some kind of tax change or stock market surprise, you’re going to end up paying way too much in fines and fees.

Instead, get set up on a regular re-balancing schedule. How often you should re-balance will depend on your needs and goals, but having a regular routine will keep you from making panicked decisions and from paying too much in fees.

As you can see, re-balancing your assets is complex, but with the right help and adherence to these tips, it can be done!

Paying for College Just Got Easier

If you’re like most other Americans, chances are you struggle with asset management, with saving money, and with financial matters in general. One of the biggest financial challenges facing Americans today is paying for their children’s college educations. Fortunately, for Oregon residents, asset management, at least as it relates to saving for college, just got a whole lot easier! The state recently passed a bill that allows Oregon residents to attend college without taking out a traditional loan. Instead, these students agree to pay back their college costs through future earnings made once they have graduated and found a job.

While some people might consider this a risky move for Oregon, it’s also a smart one in some ways. After all, studies show that those who graduate from college often earn as much as 84% more money in their lifetimes than those who simply graduate from high school.  The bill requires students to pay back a percentage of their future incomes, so the more they earn, the more the government gets back.

Unfortunately, this non-standard type of “loan” isn’t available everywhere. In fact, Oregon is the first and only state to pass such a bill, but the hope is that other states will see the benefits and start following suit. If more states introduced and passed such a bill, more students would be able to attend college and qualify for high-earning jobs, which could give the United States the economic boost it so desperately needs. Naperville residents may not have access to these types of loans just yet, but there are certain financial institutions that offer private loans or agreements similar to the option described here.

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Alan Blinder Lays Down the Financial Law

Alan Blinder is a renowned (according to some) economist who recently released a book titled After the Music Stopped: The Financial Crisis, The Response, and The Work Ahead. While getting through the entire thing might be a slog for those who aren’t professional economists or who don’t have a major interest in financial matters, Blinder does include something in his book that everyone should find interesting: his ten “financial commandments.” While the commandments are intended to help the United States as a whole to improve its finances, most of the commandments on the list apply to personal asset management as well.

Commandment number two is particularly valuable for personal asset management. It reads “Thou shalt not rely on self regulation.” What does that mean for the average consumer? Well, it means, in part, that you shouldn’t try and handle your finances and your assets on your own. Unless you’re a professional financial expert, chances are that you could use a little help getting the most out of your money and making your money work for you. By seeking regular financial advice from a professional and by following that advice, you can reap big financial rewards.

Commandment number four is also interesting: “Thou shalt elevate the importance of risk management.” In other words, if you’re only thinking about the gain involved with investments, you’re  going about it the wrong way! Always make sure that you educate yourself or that your financial advisor educates you on the risks and potential benefits involved with any investment. To make informed decisions about investments, you have to be able to see both the potential positives and the potential negatives. For honest, reliable financial help in Naperville, contact Platinum Financial Associates.

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