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·Selling matters. Most people focus on buying stocks. That’s important, but even more critical is when you sell stocks. Manage your risk by selling losing stocks when they fall 10% below your purchase price. Also, if you have a winning investment, take some profits along
way – there are more than a few people who wish they’d done so back in March 2000. ·Mutual funds aren’t always answer. Many people rely on mutual funds as cornerstone of their investment portfolio. This can be a problem, since vast majority of mutual funds consistently underperform markets. Not only that, mutual funds are extremely expensive and include hidden fees that don’t show up in their disclosed expense ratios. These hidden fees can cost you thousands of dollars and take a huge bite out of your returns. Mixing in individual stocks and exchange-traded funds can help improve your returns and keep your costs in check.
·Develop your own approach. For example, my investing style is probably best described as opportunistic – I wait patiently in conservative investments until compelling opportunities arise and then deploy capital accordingly. While it fits my personality and has worked well for my clients, it isn’t right for everyone. Some people want more risk, some want less, and others just don’t have time to spend researching and monitoring their investments. Find a strategy that fits your unique risk tolerances, goals, and preferences, and then stick with it.
Estate Planning
Retirement planning for singles can be tricky. For example, most qualified retirement plans, such as employer-run 401(k) plans, are geared toward married couples and often don’t provide for lifetime distributions to unmarried beneficiaries. This can cause major tax headaches for beneficiary. Here are some other issues to consider
·Make sure you have a will. This may seem obvious, but an amazing number of people simply ignore this basic planning step. Probate laws are complicated, time-consuming, and don’t always end up transferring your assets where you’d like. And if you’re a single parent, make sure will names a guardian for your children.
·Designate beneficiaries for your IRA accounts. Because IRA’s don’t pass through your will, you need to execute a separate beneficiary designation to make sure your IRA passes to your intended beneficiary.
·Execute a durable power of attorney. This power of attorney should not only cover your business affairs, but also your health care decisions. You hope you’ll never need these documents, but if you do, you’ll be glad you thought ahead and made necessary arrangements.
David A. Twibell, J.D., is Executive Vice President of Colorado Capital Bank in Colorado Springs, Colorado, where he directs the bank’s portfolio management and wealth advisory practice. He can be reached at (719) 482-7015 or dtwibell@coloradocapitalbank.com.
