Fi­nan­cial spring clean­ing

The Covington News - - Business -

You may or may not en­gage in many of the typ­i­cal ac­tiv­i­ties of “spring clean­ing” — de-clut­ter­ing the at­tic, re­or­ga­niz­ing your clos­ets, touch­ing up the paint, etc. — but you can al­most cer­tainly ben­e­fit from “spruc­ing up” your fi­nan­cial sit­u­a­tion.

As you sur­vey your fi­nan­cial land­scape, what ar­eas might you want to tidy up? Here are a few sug­ges­tions:

• Clear your port­fo­lio of “re­dun­dant” in­vest­ments. Over time, you may have built a siz­able in­vest­ment port­fo­lio. But if you have too many in­vest­ments that look alike, you may ac­tu­ally be hin­der­ing your progress to­ward your goals. Look for op­por­tu­ni­ties to re­place some of th­ese “re­dun­dan­cies” with dif­fer­ent types of se­cu­ri­ties, tak­ing into ac­count your risk tol­er­ance and time hori­zon.

• Or­ga­nize your fi­nan­cial records. If you’re like those of us who file our taxes at the last minute, now is the per­fect time to or­ga­nize your fi­nan­cial records, be­cause you’ve prob­a­bly got them close at hand. And it’s not just a mat­ter of hav­ing your bro­ker­age and 401(k) state­ments in nice, neat piles. Once you’ve got th­ese doc­u­ments to­gether, you might see op­por­tu­ni­ties to con­sol­i­date some of your ac­count. With all your IRAs in one place, it will be much eas­ier for you to man­age the re­quired min­i­mum dis­tri­bu­tions you must start tak­ing when you turn 70-1/2. (Th­ese dis­tri­bu­tions are not re­quired for Roth IRAs.)

• Re­view your “sys­tem­atic” in­vest­ments. Many years ago, you might have started sys­tem­at­i­cally mov­ing money from your check­ing ac­count into an in­vest­ment. But per­haps the cir­cum­stances of your life have changed and this money could bet­ter be used else­where. Scru­ti­nize your au­to­matic in­vest­ments to see if they still make sense for you.

• Check your ben­e­fi­cia­ries. Ben­e­fi­ciary des­ig­na­tions on fi­nan­cial doc­u­ments - in­sur­ance poli­cies, IRAs, 401(k)s, etc. — are ex­tremely im­por­tant, be­cause they su­per­sede even the in­struc­tions in your will. Over time, your fam­ily sit­u­a­tion may have changed, through death, di­vorce, re­mar­riage or the birth of new chil­dren, so you should pe­ri­od­i­cally re­view all your ben­e­fi­ciary des­ig­na­tions.

• Ex­am­ine your in­sur­ance cov­er­age. When you have a young fam­ily, you need a cer­tain amount of life in­sur­ance cov­er­age to pro­vide for some ma­jor ex­penses — such as your mort­gage, col­lege for your kids, per­haps some re­tire­ment funds for your spouse. But when your chil­dren have grown, your mort­gage is paid and your spouse has decades’ worth of re­tire­ment sav­ings, your in­sur­ance needs may change con­sid­er­ably. At the same time, you may find other uses for in­sur­ance. By fol­low­ing th­ese “spring clean­ing” sug­ges­tions, you can help put your fi­nan­cial house in or­der

Stu­art Hamil­ton


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