Five Steps That Will Improve Your Balance Sheet in 2016
Since New Years is a time to reflect and set goals for the upcoming year, I thought I would take the liberty of offering my suggestions that I think will make most every person better off than if they choose to ignore them. None of these ideas is a recommendation of a particular investment strategy or place to be in the market, which goes to show that it’s not all just about market returns. So, here they are:
1. Make Powers of Attorney. Making a Will has to be the most procrastinated (if that’s a word) task in existence. It’s possible, but not likely, that you can get through life without one and everything will turn out just fine. The same is not true for Powers of Attorney. If you have an accident or have the bad fortune to suffer from dementia or Alzheimers, your family will wind up paying thousands of dollars in attorney fees and spending time at the Courthouse that they never would have had to spend if you and your spouse or partner made Powers of Attorney.
2. Set up a Health Savings Account. I know I sound like a broken record, but I don’t know the downside of setting aside pretax dollars to pay for out of pocket medical expenses that you will someday need to pay. Unless you have a Cadillac health plan, the deductibles on insurance have increased drastically. HSA savings can be rolled over from one year to the next, so even if you don’t have a lot of health care expenses now, you can accumulate dollars for future use. HSA dollars can be used for long-term care insurance premiums too. If you don’t want one for yourself, set them up for your kids. It’s a great way to give them money that they can’t waste.
3. Quit Speculating on Interest Rates and Stop Trying to Time the Stock Market. Two of the least productive endeavors ever. You don’t have to own stocks. Decide what your investment philosophy is and stick with it.
4. Consider Buying Life Insurance. I often tell people that what I sell nobody wants. Life insurance is at the top of the list. But life insurance offers many benefits if people would just take the time to consider it. Not the least of which, life insurance should be considered as an asset class that can bring stability and certainty to the mix of other assets we own that change in value daily. A new product in the marketplace is joint first to die whole life. Yes, a policy on two lives that pays on the first death. A great idea for young married couples that are both in the workforce as well as older couples that want to make sure they have enough assets to last two lives.
5. Decide How You and Your Partner or Spouse Will Pay for Long Term Care if you Ever Need it. You don’t have to buy long term care insurance, but telling yourself that you will never need the assistance of a home health care worker or have to pay for skilled nursing care, is wishful thinking. Statistics tell us otherwise. If you decide to self insure, think about which assets you will sell first to pay for your care.
I could think of a few more, but I thought five was a enough. Happy New Year!
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