Taking Advantage of a Healthy Economy

Have you heard the terrific news? Despite all the terrible things the evening news likes to share with us, our economy is doing very well. In fact, we’re right in the middle of the third longest market expansion in history! And, if it lasts another two years, it will be the longest stretch ever. Unemployment is also back down to pre-2007 levels, and the stock market is looking healthy. The S&P ratio has recently reached its second-highest levels since World War 2.

So, all of that sounds great, but here’s the potential downside: Some people aren’t taking full advantage of these great conditions. It’s a good idea to review and re-balance your portfolio on a regular basis anyway, but now you have even more reason to do so.

Are you diversified enough? You might feel your risk tolerance changing slightly when conditions are beneficial, but remember to keep your long-term goals in mind. Diversification is still important no matter how the markets are performing.

Watch your debt load. Debt is one of the largest risk factors during times of favorable conditions. It’s easy to become over-confident, and take on too much debt. But remember that retiring debt-free is a good goal for anyone, no matter how much money they make, and that upswings can (and do) turn into downswings. Don’t take on more debt than you can reasonably handle. In fact, now might be a great time to pay down your debts.

Do you have a rainy day fund? Remember that old adage, “don’t count your chickens before they hatch”? It’s a good reminder that no matter how promising a situation looks, you can’t assume that everything will turn out exactly as you hope. Right now, while you’re doing well, consider establishing a rainy day fund for future emergencies.

Give us a call. It’s important to actively manage your finances during both good times and bad. Schedule an appointment with us, and we’ll review your short- and long-term goals, make recommendations for changes, and help you make the most of a great situation.