The James Dicks Blog

Every year brings with it new challenges. The global economic situation I’m sure has thrown some new challenges at your investments, but as long as you take precautions prior to any calamitous events, your personal financial situation could remain balanced and relatively stable.
The trick is to prepare yourself and your investments for any future drastic market movements. Of course, it is impossible to exactly predict when or if the market will hit new highs or experience a sudden downturn. But if you create a personal financial plan in advance, you might be able to avoid making some basic mistakes, no matter which way the markets move.

The first is a plan I constantly preach, to set your goals, both short- and long-term objectives. Be extremely specific, write them down and post them someplace that will allow you to constantly see them, read them and study them. Follow the plan and try not to make emotional decisions.

Be prepared for anything. The chances of the markets going through a correction are very good. But you must also remember that the markets just might grow in value. Markets go up and down, and you need to be prepared for that. Some investors incorrectly believe they don’t need to do anything when the markets are strong and their portfolio is gaining in value.

Don’t forget to watch your asset allocation. Know what you are invested in and make sure that you examine where you money is invested a few times each year and determine whether or not it’s working for you. You can set a plan to rebalance every month or once a quarter, whatever makes you comfortable. Just don’t ignore your investments; keep your eye on the “ball.”

Make sure your plan also has diversification built in. I know you are sick and tired of me lecturing about that basic principle of investing, but I continue to hear stories from investors all over the country who keep getting burned because they don’t practice proper diversification. If just one segment of the market is providing all your gains, you could end up with an unbalanced portfolio that could possibly cost you in the long run.

Once you determine your investment style, institutionalize it to your personal trading method. When you find something that works for you, don’t let go of it. Try writing a journal to document your winning trades and, maybe even more important – your losing trades. Just like writing down your goals and ambitions, physically writing down the particulars about your winning and losing trades will burn the experiences into your mind permanently so you’ll know what to do, or what not to do, the next time.

The information available to us is almost infinite. Unlike other parts of the world, most of us in the United States have the Internet, libraries, book stores, magazines, workshops, college courses, television programs and radio shows that can teach us about the various strategies of investing. Find the plan that works best for you and make sure you feel comfortable with the manner in which you are involved in the investment community. If you need help, find an investment professional who can be a mentor and a guide. The more you learn, the better off you will become.

Happy Investing in 2010!

As we enter a New Year, I want to remind you about something I consider to be a very important aspect of any well-balanced financial situation. Make sure you do frequent financial checkups to insure you are on the proper path to develop your assets effectively. Situations can change very quickly in life and you must consider, on a regular basis, the composition and structure of your personal financial goals, tools and investments. There are many issues to consider. Things like getting rid of unnecessary debt, developing proper spending habits, checking your insurance needs, examining your taxes and determining whether or not you need to rebalance your portfolio. I’m sure you can come up with a number of other areas that, on a personal level, will positively or negatively affect your financial life. Sift through it all very carefully.

There are a number of ways to determine the best methods of handling money that didn’t exist even a decade ago. Today most of us have personal computers that can be used to assist your financial development. There are a number of software programs that can guide you by showing where your money is currently going. These programs can help you determine the best methods of using your cash to enhance your investments. Determine how much is coming in, how much is going out and establish where the money is going. It’s really that easy. Once you know those specific facts, you can make your adjustments.

One question you really should ask yourself is whether the investment techniques you have been using are actually working for you to build financial wealth for you and your family. If you’ve had problems, changes in the market trends, an alteration in your personal lifestyle (a new baby, a recent move, a new job, you’ve just married, etc.), then make the necessary changes to make sure your money is working to fit your life’s changes and goals. If interest rates are down, consider refinancing your home, if you can. Today, if you have good credit, interest rates are as low as this country has seen in more than a decade. Plus, make sure you build at least three to six months worth of living expenses just in case of an emergency, if you don’t already have that amount put away safely.

Other areas of interest to your personal financial life include insurance coverage. If your agent hasn’t called you recently, pick up the phone and request that you take an inventory of your coverage (home, life, auto) and adjust where needed. And for goodness sake, examine your credit report at least once a year. It might be a good idea to actually contact the credit agencies twice a year, especially if you are about to make a major purchase.

Just as you need to develop and then redevelop your short- and long-term personal goals throughout the year, so it goes with the state of your financial well-being. This should not be an unpleasant chore but rather something enjoyable. Remember, by conducting these occasional checkups, you are insuring that positive financial results are more likely to be attained than negative results.

As we’ve seen during the past year or so, anything can happen, which can force you off your fiscal course. Events that can make a difference in your life occur at a moment’s notice. Make sure that when unforeseen events occur, you make the needed corrections that will rebalance your financial life; plan to make a quick check every three months or so. This is all part of goal setting that I believe is so important to leading a balanced and prosperous life. Stay focused and make sure you perform your personal checkups on a regular basis.