A Further Look: Capture 'Back to School' Spirit With this Financial Preparedness Checklist


David Root CFP®


As we approach the end of 2020, we find ourselves emerging from a six-month life vacation and heading into new territory. Remember starting school armed with anticipation and excitement for what the future holds? Today just as it was then, it’s not about looking back, it’s about looking ahead.


So, what are the lessons gained thus far in 2020? Economics? Social studies? I offer the most important lesson is that betting against America is always a loser’s game. That’s why even in the face of great uncertainty, fear and panic – we have been able to largely stay the course with our processes in managing our clients’ assets and life plans.


In times like these, over-thinking can be your worst enemy. It can prevent you from taking advantage of the great opportunities that come during a time of change. In the spirit of Kipling’s poem, it is all about keeping your head while others are losing theirs.


The virus isn’t gone, but may be soon. We should start planning for a world post-vaccine. Even Wall Street appears to now be looking ahead 12-18 months as we have seen a rapid rise in the stock market. It is saying that America is the answer, and it’s time to go back to school on the fundamentals.


Enter financial preparedness. The best thing we can do now is review our current situation, and ensure we are prepared for the next event that may come our way. When they were young hockey players, I often told my sons the harder you work, the luckier you get.


There are some important things you can do to safeguard your finances while taking advantage of new opportunities. Your Financial Advisor’s standard of care in preparing you for the future should include:


  1. Re-assessment of long-term financial goals based on any events such as a career change or health concern related to COVID-19.

  2. Assessment of your investment strategy with your advisor to ensure that you remain on course for your long-term objectives. If you were scared out of the market, determine if it is the right time for you to get back in to take advantage of any impact 2020 has had on stock sectors. (i.e. technology, real estate, energy)

  3. Review of your employer-sponsored retirement plan or any additional retirement accounts to determine retirement readiness. Determine if you are still on course after COVID-19’s impact.

  4. Review loan and mortgage interest rates/terms to optimize borrowing in consideration of long-term debt. Interest rates are as low as they have been in decades, and are likely to stay that way for a while. (Consider refinancing or establishing a line of credit)

  5. Conduct an insurance strategy review: Include life insurance, long-term care insurance and whether you have enough umbrella coverage.

  6. Review estate and legacy planning goals including medical directives, powers of attorney, wills and family inheritance/gifting strategy – and ensure against any new tax impact. New tax laws are on the horizon, regardless of who is in the Oval Office. For example, marital deductions are likely to go lower.


As they say in NASCAR, don’t worry about what is in the rearview mirror. Focus on what is in front of you. I’m excited to see what the future holds for us. As the late Carl Sagan once said, “Somewhere, something incredible is waiting to be known.”


Thanks for reading.


Dave


David Root

Founder and CEO

DBR & CO


David Root is Founder and CEO at DBR & CO, a Pittsburgh-based wealth management firm. If you would like to contact the author, David Root, please e-mail him at d.rootjr@dbroot.com or call 412-227-2800.


This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.


All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses.


The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.


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