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Your Financial Economy

The U.S. recession may be over but economic challenges clearly still exist.  The good news is that the gross domestic product has grown consistently, consumer spending has held up, and business spending is slowly improving.  

The stock market continues a slow but steady ascent.  If this expansion continues as expected, it should foster the further recovery of economies worldwide.  But how does this all affect you personally on a day-to-day basis?  There is “the economy”, and then there is your personal economy.   Do you have a personal economic forecast?

My Economy

Perhaps you suddenly need to purchase braces for your 13-year-old child.  Does that throw your balance sheet into a tailspin?  Or maybe you are dealing with complicated savings issues, trying to work simultaneously toward many short- and long-term goals.  Are you buying a new home?  Having a baby? Caring for an aging parent while saving for your child’s education or your own retirement? Like interest rates and corporate earnings in the larger economy, events such as these in your personal economy are interconnected and greatly affect each other. 

Everyone’s financial “big picture” is affected by a variety of life events.  These are the specific events on which you must focus your planning to gain control of your financial future.

Your Personal Forecast

Your best long-term defense against personal economic instability is to have a plan or in other words a personal economic forecast.  However, according to a recent survey from the Employee Benefit Research Institute, workers as well as retirees say they spent more time in the past year planning for holidays and social events than planning for retirement.   Half of all households have not even calculated how much money they will need to save by the time they retire.

Consider working over the long term with a financial advisor to get sound, financial advice that’s personalized to you, your unique situation and your individual goals.  He or she can help you put the pieces of your financial puzzle together by focusing on those aspects of your life that you can control. 

Below are some major life events that many of us experience, and some investment decisions that you may want to consider to get you started in taking control of your personal economy.

When you get your first real job:

  • Start a savings account to build a cash reserve.

  • Start a monthly retirement fund and make regular monthly contributions, no matter how small.

When you get a raise:

  • Increase your contributions to your company-sponsored retirement plan.

  • Invest after-tax dollars in municipal bonds that offer tax-exempt interest.

  • Increase your cash reserves.

When you get married:

  • Determine your new investment contributions and allocations, taking into account your combined income and expenses.

When you want to buy your first home:

  • Invest some of your non-retirement savings in a short-term investment specifically for funding your down payment, closing and moving costs.

When you have a baby:

  • Increase your cash reserves.

  • Increase your life insurance.

  • Create or update your will.

  • Start a college fund.

When you change jobs:

  • Review your investment strategy and asset allocation to accommodate your new salary and a different benefits package.

  • Consider your distribution options for your company’s retirement savings or pension plans.

When you reach age 55:

  • Review your retirement fund asset allocation to accommodate the shorter time-frame for your investments.

  • Continue saving for retirement.

When you retire:

  • Carefully study the options you may have for taking money from your company retirement plan.  Review alternatives with your financial advisor.

In any life stage:

  • To provide liquidity for emergencies, have a cash reserve in a money market fund, traditional savings account or CD that equals three to six months of your living expenses.

  • If you can tolerate a little risk, you should have a portion of your portfolio in stocks to help protect your savings from being devalued because of inflation.

  • Every investment decision should include tax considerations, and you should be aware of the taxable status of your investments (taxable, tax-deferred or tax-free) when setting up and reviewing an investment strategy.

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This information is provided for informational purposes only.  The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor.  The views expressed may not be suitable for every situation.

American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer.

This communication is published in the United States for residents of  North and South Carolina only; and this advisor is licensed only in  the states of North and South Carolina." 
Roy P. Janse 
Financial Advisor 
American Express 
Financial Advisors, Inc. 
IDS Life Insurance Company 
1150 Haywood Road 
Greenville, SC 29615 
Phone: (800) 554-0805 x141 
Fax: (864) 234-7139 

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