Vanguard Funds’ John Bogle once said, “Investing should be boring.” During sustained market rallies, when the S&P 500 seems to hit new record highs every week, this often seems like good advice: Just set it and forget it. The problem comes when the market suddenly hits a period of turbulence. When this occurs, spooked investors often make bad mistakes—like selling stocks and stock funds at a loss. Anyone who bailed out of the stock market in spring of 2020 when the S&P 500 dropped by 30% only to see it fully recover by mid-summer learned a costly lesson about giving in to irrational impulses. So, how can you keep from making bad decisions? Well, just as the best time to get an umbrella is before it rains, the best time to start thinking about making changes to your investment portfolio is during periods of calm before a potential market storm. One good way to do this is to automatically rebalance your portfolio at least once or twice a year at designated times. For example, if the targeted asset allocation in your IRA or 401(k) account is 60% stocks and 40% bonds and rising stock prices have increased the stock allocation to 70%, consider selling 10% of your stocks or stock funds whose price you believe have peaked and use the profits to buy more bonds to restore that 60/40 mix. Or, if you’re close to retiring and realize you will need to withdraw more money from your retirement accounts each year than you originally expected, consider reducing your allocation to stocks when the market is still calm and move the proceeds into cash or money market funds. That way, if an extended bear market happens later on you won’t have to sell as much stock at a loss to generate the cash you need to live on. To make these decisions effectively you need to understand the connection between your investment strategy and your financial goals and have the self-discipline to make these adjustments even during volatile markets. If you don’t feel qualified to do this yourself, consider working with a fee-only fiduciary financial advisor. Entrusting them to keep your investment plan on track through all kinds of market conditions will give you greater peace of mind in knowing that your financial future is in good hands.

For further research:

• Next Avenue, Mind Over Money: How to Do It Right
• Terrysavage.com, Starting Over This Fall 

According to Michael Clinton’s new book, Roar: into the second half of your life (Before it's too late), those who are approaching retirement should focus less on the idea of leaving the full-time workforce and more on what they can do to find the most fulfillment during this time. Whether it’s working part-time, starting a new business, taking up a new hobby, traveling, volunteering for causes your care about or mentoring young people, these various “layers” can shift your mindset from “retiring” to “rewiring.” And while you don’t need to be wealthy to enjoy a fulfilling life during retirement, meeting with a qualified financial planner can help you paint a realistic picture of what your finances will be like during your second half and which items on your “roar-wish- list” are truly attainable.

For further research:

• Next Avenue, How You Can Roar Into the Second Half of Life
• Michael Clinton, Roar: into the second half of your life (Before it's too late)

Medical care is becoming a for-profit business even among nonprofit providers. Despite huge advances in technology, care is increasing impersonal, primary care physicians are getting harder to find, and patients are constantly being hit by “surprise charges” from medical procedures that are financially devastating. Many of these charges are unexplained up front and may be incurred by physicians, residents and fellows who are not part of your network. In this environment, it’s up to you to be your medical advocate, or ask someone you trust to serve in the role of healthcare proxy to come with you to appointments to ask key questions you may be too overwhelmed to ask yourself. When evaluating primary physicians or specialists, ask questions such as “Is your practice independent, or owned by a larger conglomerate?” “Does you or your practice receive compensation or special benefits from pharmaceutical companies?” “Are there ways for me to reduce costs, such as paying one co-pay that covers multiple visits?” “Can we meet virtually, and can I contact you via text or email?” Before you agree to any kind of potentially costly procedure, ask both your physician and your healthcare provider questions such as “How much will this procedure cost me out of pocket?” “Will all the physicians involved be in my network?” “Are there less expensive alternatives to an operation, such as physical therapy or prescriptions drugs?” And if it’s a major operation, you’ll want to be assured that the surgeon you’re consulting with will perform it, rather than a resident. If you or your healthcare proxy doesn’t feel they have the knowledge to sort through these issues, consider hiring an independent professional patient advocate or billing specialist.

For further research: 

• Next Avenue, How the Culture of Medicine Kills Doctors and Patients 
• Robert Pearl, MD, Uncaring: How the Culture of Medicine Kills Doctors and Patients
• Rally and Healthcare Bluebook: These sites provide comparison pricing information for healthcare providers and medical procedures in your area
• GoodRx.com: Find the lowest local prices for prescription drugs

Some people describe the current economy by paraphrasing Dickens: It is the best of times, and it is the worst of times. On the plus side, the economy seems to be steaming forward, with robust job growth, increased consumer spending and a stock market that seems to set new records every week. Yet, in some regions and industry sectors, millions of Americans are still out of work and are facing foreclosures, eviction and the end of unemployment benefits. While inflation has picked up this year, it may either be temporary or long-lasting. While COVID-19 immunizations have allowed life to return to nearly normal in many areas, rising infection rates among the unvaccinated in many states are raising the specter of a return to lockdowns and business restrictions. While new infrastructure spending will help improve America’s crumbling roads, bridges and water supplies, the trillion-dollar cost will greatly increase the national debt to near record levels and may result in increased gas taxes and rises in capital gains taxes and taxes on the wealthy. Given these dichotomies, it’s hard to predict where the economy is headed, making it difficult for people to figure out what they should do financially to prepare for what may or may not happen. The best answer may be to simply take a good look at your personal finances and investments right now and see if there are minor adjustments you can make that will better prepare you for any outcome. For example, if you’re worried about inflation eroding the value of your nest egg, you might want to increase your exposure to stocks. If your stock portfolio is concentrated in larger companies, it might be time to sell some of the stocks (or funds that invest in them) and use the proceeds to gain greater exposure to midcap, smallcap and international stocks, real estate and even gold. If you’re worried about losing your job, start building up an emergency fund to pay for everyday expenses for at least six months or more, but don’t lock up that money in a CD where you’re barely able to earn any interest. If you’re paying down a mortgage, consider refinancing at today’s lower interest rates, before the Federal Reserve starts raising interest rates. If you’re unsure how to do this on your own, consider working with a qualified fee-only financial planner who can help you prepare for both the best and worst of times to come.

For further research:

• Next Avenue, Money Tips for an Uncertain Economy
• Terrysavage.com, A Tale of Two Countries

It’s a common belief that owning a home is an investment, but the reality is otherwise. While the national year-over-year appreciation rate of 14.5% (as of April 2021) may seem high, this figure includes both areas where housing prices are skyrocketing as well as regions where appreciation is relatively low. Once you add the costs of owning a home—mortgages, taxes and home repairs—into the equation, the actual appreciation rate of the average home barely matches the inflation rate. So, for many people, their home not only isn’t an investment, but, depending on the never-sending cycle of home maintenance costs, it may end up being a money-losing proposition. That’s why you should think of your home solely as a place to live in, and one for which you need to set aside money each year for both ongoing maintenance as well as costly “surprises.” Making a list of when you last fixed your roof, had the exterior painted, installed a new furnace or central air conditioning system or bought a water heater, dishwasher or washer/dryer and estimating when they may need fixing or replacing can help you estimate how much you should put aside each year-- 1% of your home's market value may be a good place to start--and financially prepare you when these “surprises” occur. Having this rainy-day fund is important, especially during retirement, because the last thing you want to do is to tap into your retirement nest egg to pay for emergency expenses, especially if making a non-required withdrawal from your IRA or 401(k) plan assists could raise your taxes.

For further research: 

• Next Avenue, Lessons Learned from a Wet Laptop