Jonathan Pond


Here are five matters to ponder when you have some time. Ideally, you will revisit these annually since our financial lives are always subject to change.

1. Do I know how my investments are diversified? One characteristic of the investment markets over the past several years, particularly this year, is how much the various stock and bond prices have fluctuated. This can result in larger than usual variations between your current investment allocation and the target allocation. Rebalancing helps reduce these variations which avoids having too much or too little invested in a particular investment category.

2. Do I have adequate insurance coverage? Checking on insurance adequacy should be an annual exercise, perhaps more frequently if there is a change in family or financial circumstances. Lacking sufficient coverage can be very costly as can having more coverage than you need.

3. Will my debts be paid off before I retire? Those who retire debt free are way ahead financially than those who remain burdened with debt. If this is a concern, devise a plan to pay off any loans before or shortly after retirement.

4. Is my estate up to date? It’s surprising how many adults lack wills and other essential estate planning documents. Even those who have these documents may not have reviewed them for many years, so they don’t consider changes in federal and state regulations or the family situation. These oversights can be costly and a great inconvenience to heirs.

5. Will I be able to thrive in retirement until age 100. If you are in good shape on the preceding matters, you should be in good shape for a financially comfortable retirement. But you should still run a financial projection or two to provide more assurance that you are in fine financial fettle. There are numerous financial projection programs available gratis on the internet.

Smart Money Tips

•    The surest way to build up your investments. Articles abound on how poorly prepared some people are for retirement. Those who have accumulated retirement savings harbor the fear that a big drop in stock prices could wipe out many years of gains. But before concluding that you’ll never be able to afford to retire, keep in mind that there is one surefire way to build up your wealth and that is to save regularly and regularly increase the amount you’re saving. Also, there is an advantage to continuing to make contributions when investment values are depressed, like they are now. In effect, you’re buying more shares of a fund or stock with the same dollar contribution compared with what you would have bought in the more ebullient past. This is known as dollar cost averaging, and it’s a tried-and-true way to be a successful investor.

•    Help your children and grandchildren learn about investing.  Here’s an easy way to help your children or grandchildren learn about investing. Just don’t make money a taboo subject. Discuss family finances and investments in their presence. Several years ago, I surveyed over a thousand mutual fund managers. One of the questions I asked was how they first learned about investing. Most of the managers attributed their early knowledge to hearing their parents and grandparents discuss the family’s investments. A majority of the survey respondents did not grow up in wealthy households; rather, their parents and grandparents were of average financial means. Whatever your financial circumstances may be, involve the younger persons in your life in family money matters.

Food for Thought

The most rewarding things you do in life are often the ones that look like they cannot be done.
      -Arnold Palmer

Money Can Be Funny

All money nowadays seems to be produced with a natural homing instinct for the Treasury.
      -Prince Philip

Word of the Week

undecillion noun (uhn-di-SIL-yuh n)– A large number – a one followed by
36 zeros in the United States or 66 zeros in Great Britain.

Origin: From Latin undecim – eleven (from unus – one + decem – ten) + English –illion (as in million)

Au Bon Pain was once sued by an aggrieved customer for 2 undecillion dollars. One wag noted that if the plaintiff wins the full amount and must pay taxes on it, the U.S. Treasury will have so much money that taxes will never have to be assessed on anyone in the future.