MANAGING MONEY IS an endeavor fraught with uncertainty, so we should be mentally prepared for what we can’t control, while striving to control what we can. With those twin goals in mind, we might focus on five broad areas.

First, we should make sure we save diligently during our working years, while taking care not to spend too much once we’re retired. Investors expend endless effort to improve their portfolio’s performance—usually to no good result. Meanwhile, they often ignore one of the most powerful levers at their disposal: how much they save and spend.

Second, we should manage risk. We can’t stop the stock market from crashing or our boss from laying us off. We also can’t avoid all illness or prevent our neighbors from threatening us with a lawsuit. But we can make sure we’re prepared for these and other misfortunes—by keeping some bonds in our portfolio, building up a rainy-day fund, and buying health and umbrella liability insurance. We can limit the financial impact of life’s misfortunes, though these efforts can come with a hefty price tag, in the form of lower investment returns and steep insurance premiums.

Third, we can control the financial costs we incur. We can favor lower-cost investments, notably index funds. We can shop for lower insurance premiums, and then trim those premiums further by raising deductibles on our auto and homeowner’s policies, while extending the elimination period on our disability and long-term-care insurance. We can shop for loans with lower interest rates.

Fourth, we can control our annual tax bill. That means making the most of tax-favored retirement accounts, while favoring tax-efficient investments in our taxable account.

Finally, we can control our own reaction to the financial markets’ ups and downs. To make good money in stocks, we really need at least a 10-year holding period. But even if we have that sort of time horizon or even longer, we’re often swayed by short-term market movements, growing too bullish as share prices climb and becoming overly cautious when they fall. Do you struggle to remain calm in the face of market turbulence? You might seek guidance from a more seasoned investor or a fee-only financial advisor.

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