The Finance Blogger

Many consumers do not have a financial plan and have no idea of whether they have enough set aside for retirement or not. Many lose sleep at night worrying about this question and sometimes even ruin their health. The Top financial plans for consumers include meeting with a financial adviser who is willing to help them figure out a budget and savings strategy. There is really only one way to deal with this issue. The only way to figure this out is to look at the following elements of a total financial plan to understand their situation:

• How much do they have in savings and how will it grow over time
• Will they have enough in savings by retirement
• How much income will be generated from savings, private and public pensions?
• What is their expense budget to-day and what will it be in retirement
• What will they do in retirement to occupy their time and challenge themselves?

If you can answer these questions you are well on the way to developing your financial plan and taking the steps you need to make sure that your income in retirement will match your expenses. The following are a few stats from a recent survey that was completed, which readers may find interesting.

Top financial plans for consumers

• How can I save and pay down my debt?
• Can I afford the lifestyle I want in retirement?
• When can I retire
• How can I reduce my taxes and grow my net worth faster?
• Should I pay off my mortgage or concentrate on my retirement savings?

The top five financial planning recommendations to help consumers deal with their financial concerns

• Pay yourself first is a simple and effective long time approach
• Develop a plan, printed it out, and review it with a financial planner
• Reduce your most expensive debts as quickly as you can
• Learn about all tax saving options
• Make regular contributions to your retirement plan

What do consumers think about their finances?

• Only half of the consumers have a financial plan
• One-third of consumers plan on reducing their debt
• Only one-quarter of consumers are confident that they can manage their debt
• Holiday seasons contribute significantly to increases in consumer debt

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Studies show advisers are focused on their income – commissions etc and less so on providing financial advice to their clients. Most advisers do understand that if they are going to stay in business for a long time, they need to make sure that they are perceived to have their clients best interests at heart. However in my personal experience, many are on commission and many make more money when you are doing a trade or investing additional money. Sometimes this is a good thing for your investment portfolio and sometimes you are trading for no reason and just paying fees for nothing.

How do You Make Sure You Get the Best Financial Advice?

Develop your own strategy for your investments and stick to it unless someone can provide you with factual well thought out comments that would cause you to reconsider your strategy. This may involve some work on your part, but at least you will be well informed when you do talk to your adviser and will not just accept things blindly.

Talk to several advisers and ask them the same questions to see if you get the same answers and recommendations. Make them justify their positions and explain why a specific action should be taken. If the strategies are divergent from our own or different from each other, you may want to get a third opinion. The more data you have the better your decision will be.

Steer clear of advisers who do a lot of trades. These guys are just interested in padding their own pockets. If you are chasing profits or speculative stocks and not making any money, then you know that the only one making money is your adviser.

Maintain a Balanced Portfolio

Maintain a balanced portfolio that is well diversified. You never want to be invested in one investment only. If it goes bad you have lost your entire portfolio. If you are well diversified, the losses will be much less. The same applies to advisers. If you have a decent amount spread your money so that you get those extra opinions and strategies.

Review your strategy annually or even twice annually if there is a volatile market. Update your strategy only if needed and discuss it with your spouse as well as your adviser. This is important to make sure that you do not deviate too much from your core strategy.

Adjust for the long term for your retirement pension. Some advisers are  only interested in short term gains and a lot of trades. Long term buy and hold does not make them a lot of money. But it does decrease your cost and you still collect dividends and interest depending on the investment type

Once you take all of this into account, select an adviser that is aligned with your fundamental goals and objectives.

We received the following email excerpt from our investment adviser and wanted to post it here for our readers. Here is Keep Market Declines in Perspective in verbatim. Also as of this update in Aug 2016, most people feel that there is another major adjustment in the markets coming which will get everyone concerned and excited. Well the adjustment in the markets never came as of Aug 2016 and now they are talking about the bull market continuing. The markets continue to roll along and increasing. Some people now feel that the DOW will hit 25000 before 2020. This is when I begin to get really nervous and we need to keep in mind the comments of sound minds and people who really know the markets over the long term. The comments of our investment adviser are even more important in situations like this one coming.

Everyone will have their own perspective on what they should do, however the important thing is to never sell low and lock in your losses. Read the following and then let us know what you think about the overall strategy of Keep Market Declines in Perspective.

With so much going on in the market and economy, I wanted to provide some perspective from Canadian Market Strategist Kate Warne. This advice will apply to many investors and they will find it helpful in forming their overall investment strategy.

Keep Market Declines in Perspective

Although the U.S. debt ceiling increase removed concerns about a possible U.S. government default, stocks have continued to decline based on several recent weak economic reports and worries about European debt. Revised U.S. gross domestic product (GDP) calculations showed growth was 0.8% in the first half of the year, which was much weaker than expected. While first-half growth in Canada was somewhat stronger, slower economic activity in the U.S. and around the world will have an impact on the Canadian economy. However, not all the news was bad. Canada’s most recent retail sales reading was better than expected, and while U.S. consumer spending declined slightly in June, as consumers turned cautious, the month of July showed they were becoming more confident.

Ups and Downs Are Common

Stocks have dropped by more than 6% over the past two weeks, and the TSX is down about 13% from the high it reached in April. Even though they can be unsettling, these types of stock market declines are common and not a reason to abandon your investment strategy. In fact, long-term investors frequently view them as opportunities to add quality investments at lower prices.

Historically, stocks have dropped by 5% about three times a year, and we’ve just experienced the second 5% decline in 2011. They’ve also dropped by 10% about once a year, which has occurred recently. And looking at last year, the TSX dropped about 10% in response to similar worries about European debts, but the market rebounded to end the year up nearly 15%.

A Bright Spot in Corporate Earnings

These reports also may suggest that U.S. job growth sputtered in July. This helped keep the U.S. unemployment rate high, since improving economic growth normally leads to hiring. Slow economic growth is certainly disappointing, but it can still be a good environment for investors. Many people may be overlooking strong second-quarter corporate earnings, which are up more than 30% over the past year. Companies in the TSX and S&P 500 are on track to reach new record high earnings this year, but their prices haven’t kept pace. As a result, we believe many quality companies are attractively valued.

Invest in Your Strategy, Not Your Emotions

Investing is more than buying when you feel good and selling when you feel bad. It’s about developing and sticking with a solid strategy that addresses your needs today as well as your long-term goals. It can be tempting to turn your back on your investment strategy, but we believe that is a mistake. You can’t control the market or the economy, but you can control how you react to them. If you find yourself reacting to every headline, it may help to take a step back and evaluate the longer-term positive trends in the economy and earnings. We believe they will ultimately matter more than the market’s short-term ups and downs.