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4 Financial Questions Every Household Should Ask Thumbnail

4 Financial Questions Every Household Should Ask

A reflection by Wayne Wagner Jr., ChFC

Here at the beginning of a new year is typically a time where many of us take time to reevaluate the year before. To put it in terms of our favorite crime shows, we kind of do an autopsy on the results of the year and then plan the year ahead.

For my family, we always go away someplace warm during this time of the year, and we have big, audacious conversations.

We talk about the big picture. Who are the people we want to be in 10 years? What are the things we want to accomplish in the next decade? Then we work backward to the one-year plan, and what are we going to do in the next year to kickstart the next decade?

I thought I'd take a few moments here at the beginning of the year to outline some areas regarding financial planning that you may want to consider reviewing here at the beginning of your 2022.

1. Reconsider Your Investing Risk Tolerance

Asset prices have gone up, and the stock market's been on a runaway tear for the last 18 months since March of 2020. Are you in a different position today? Are you closer to milestones?

Maybe you've got a bucket of money that you're planning to use for some specific goal or milestone, and that milestone's two or three or four years closer than when you last evaluated the risk in that bucket.

The nearer the goal, is it time to move your accumulated capital towards less risk? If the goal is still far away, do you have built in recovery time that enables you more freedom to take risks this year?

This is especially true regarding your biggest picture goal - financial independence. Long story short, make sure your investing risk tolerance matches your financial goal timelines. Consider rebalancing with regard to how much risk you're taking in your portfolio overall.

2. Be Aware of Traditional Safe-Harbor Investments vs. Inflation

We're currently (January 2022) in a low-interest-rate environment. That means your bonds and other traditionally safe interest rate assets are going to be getting very, very little income out of them. 

This is cause to be careful about the traditional investment-grade asset classes, or even things like stable value funds, where the returns are probably not going to keep up with inflation over the course of the next three to five years. You may want to reconsider how those assets are positioned.

3. Take Another Look at Your Estate Plan

For my wife and I, we picked our heads up this year and found out we've got a 20-year-old and a 17-year-old. For us, it was a wake-up call that we really need to revisit our estate plan. It's been a number of years ago and our world has changed and our kids have grown.

The goals and priorities that we have with regard to our estate plan are different than when we originally drafted those documents. That's why it's on my higher priority to do list to revisit our estate plan and make sure it aligns with your present assets and values.

5. Re-evaluate Your "Hourglass" Progress

For most of us, we dollar-cost average assets into the market and risk-based assets over the course of our working years. That's the accumulation of sand in the hourglass. As we get closer to financial independence, it's time to turn that hourglass over.

When we turn that hourglass over, drawing down capital is far, far different than accumulating capital. Things like dollar-cost averaging actually start to work against you as you start to draw money out of your capital investments. 

So as you're approaching that point of financial independence, it's never a great idea to take the hourglass and flip it overall at one time. A far better idea may be to start turning that ship, over the course of maybe three to five years as you close in on when you want to be financially independent and step away from working full time. 

If you need a little bit more insight into what it looks like to slowly turn the ship into financial independence, I invite you to schedule a time to talk. I'm happy to help you get a better grasp on a gradual transition into the financial part of financial independence.

Start turning that hourglass over slowly. Don't wait until the day after you've retired and have to do the entire thing all at one time.

Turning that hourglass over more slowly over that three to five year period of time reduces the risk you're taking with some of your assets. You can focus on the income strategies and asset protection strategies to help provide the income that you need during those early years of financial independence. 


I hope this has been helpful for you. Here at Vizionary Wealth Management, we're always here with perspective for the decisions ahead. If we can help, please don't hesitate to reach out anytime. Have a great day and happy New Year to you.

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