With Halloween comes ghosts and skeletons, but there are actually other frightening things that should be keeping many Americans awake at night, and not only on Oct. 31. While few trick-or-treaters will dress up as an Inadequate Financial Security Plan this Halloween (those costumes are yet to be sold in stores), financial planning remains a scary topic that everyone needs to address.
Halloween is the perfect time to sit down and start asking yourself those worrisome financial questions.
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Getting up the nerve to face stressful or intimidating money issues is difficult, but doing so can ultimately protect and prepare individuals financially from things that go bump in the night. When considering worrisome topics from estate planning to market volatility, it is most important for investors to focus on long-term financial planning and avoid being influenced by short-term market events, because that is when a financial situation can really become scary.
Estate planning. Having conversations with family about death can be uncomfortable, but the idea of having an out-of-date or even nonexistent will or other estate planning document is even more frightening.
It is important to review these documents periodically in order to factor in your health, relationships and finances as well as ensure your wishes are current, all with the ultimate goal of protecting your assets and the people you love.
In addition, it is typically helpful to give important family members at least an idea, if not the full details, of what will be coming their way. If you are having a difficult time convening your relatives, consider setting aside a few minutes during an annual holiday or family get-together.
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Evaluating your asset allocation. It is important to regularly evaluate your portfolio, particularly when a life event such as marriage, a new family member or an approaching retirement can cause your financial needs to change.
While it can be a stressful exercise, allocating your portfolio in a manner that matches your risk tolerance and financial goals can ultimately give you additional peace of mind. If you aren’t sure which adjustments to make, speak with a financial advisor who can help.
Reacting (or not) to negative market events. With major market events popping up around every corner — from the upcoming presidential election to unforeseen geopolitical issues, such as Brexit — it is increasingly tempting for spooked investors to make unwarranted changes to their portfolio that can end up negatively impacting their returns.
Rather than reacting to short-term market events and potentially incurring associated fees or losses, continue to follow your long-term strategy and focus on quality investments. History has shown that markets inevitably recover and patience indeed pays off; investors who stay the course will avoid being haunted by mistakes made in moments of panic for years to come.
Asking your financial advisor the tough questions. With the Department of Labor’s fiduciary rule top of mind for financial professionals and investors alike, it is important to ask your advisor questions that will help you understand whether they are acting as a fiduciary (which requires them to act in your best interest) or are only held to the less stringent suitability standard.
You should also ensure that you are fully understand their fee structure and how your portfolio is allocated and why. If the person you are working with is hesitant or unwilling to communicate with you openly, you may want to consider taking your money elsewhere.
On the other hand, even if you have a strong and transparent relationship with your advisor, don’t be afraid to ask questions or challenge them to ensure you are being guided into investments that align with your financial goals. Checking in consistently so that you are both on the same page will help prevent unexpected losses and prepare for a financially secure future.
[Read: How to Invest in Dividend Funds.]
While anything that has the potential to negatively impact your hard-earned money can be scary, effectively managing the factors that are under your control — and reacting rationally to those that are not — will help you feel confident in your investments, reduce your downside risk and better position you to achieve and maintain financial well-being.
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The Scariest Parts of Financial Planning originally appeared on usnews.com
