Listed here are some protected cash strikes buyers ought to be making proper now

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Despite concerns about rising bond yields, many investors are seeing the best of times today.

The economy is growing and should get stronger as stimulus checks and childcare tax credits help millions of American families. More people are being vaccinated every day, which increases the prospect of a more open economy. And at least for now, inflation and interest rates will remain low.

In this scenario, how should investors play for the rest of the year?

I believe that investors cannot time the market regardless of the strength of the economy or the valuation of the stock market. Instead, stick through thick and thin with the same solid, diversified financial plan that was originally designed to build financial independence.

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Unfortunately, many investors are taking some dangerous steps.

Some are trading more individual stocks in their accounts within a few years of retirement, tracking returns as they near the finish line. This is one of the most dangerous things an investor can do. With each withdrawal, they see an opportunity to buy. And almost all of them are buying the most popular technology-related stocks that have risen in value over the past year.

A smart investor understands that there is movement of money and traps to be avoided. Here are some to consider right now.

Check your portfolio allocation: It’s always a good idea to review your asset allocation to make sure it matches your risk tolerance, especially for baby boomers who are about to retire.

The recent bull market has led to believe that the risks are currently low. However, when investors are most comfortable, the risks are actually heightened. It is extremely important right now to make sure that you are genuinely diversified across multiple asset classes – including value and international stocks that have performed poorly over the past few years.

Many investors are becoming less and less diversified at this point and are overly exposed to the stocks and sectors that have had the best results recently.

Review your savings priorities: The pandemic has taught us that the best way to be prepared for the unexpected is with a solid financial cushion. Make sure your major investment accounts are fully funded before you spend $ 25,000 on buying more Facebook or Apple stock.

This includes health savings accounts that allow individuals to donate $ 3,600 and families to donate $ 7,200 in 2021. 401 (k) plan and other qualifying retirement plans, traditional and Roth individual retirement accounts; and finally after-tax savings accounts.

And while you might be building quite a nest egg, you should have enough cash in the bank to cover three to six months of living expenses. At some point there will be a recession or a market downturn. Instead of accessing impaired assets, you can pay for all of your needs with an emergency fund.

Interest rates are still low. Therefore, consider refinancing: Even if you missed last year’s historically low interest rates, interest rates are still at generation lows. For those with mortgage, personal, or credit card debt, it would be wise to consider your options now.

The only caveat here is the federal student loan debt. Payment requests have been paused and interest payments have been suspended. And there is a possibility that some of these loans will be given out.

Until there is more clarity about future payments, you should hold off refinancing any outstanding federal student loans. However, if you have privately held student loans and can get a lower interest rate, refinancing makes sense.

Estate planning is important: Many young people and couples neglect to develop a will and inheritance plan in their early years. But after the fear we experienced from the pandemic, if the unexpected happens, we should all make sure our loved ones have financial security and that assets are distributed based on your desires.

The review checklist includes updates to life insurance policies and guidelines for healthcare and beneficiaries for all insurance, broker and retirement accounts. With online platforms now more robust than ever, low-cost solutions are available at the touch of a button.

Let’s face it, none of these recommendations are exciting. And that’s the point. While others may be looking for the latest stocks, now is the time to make sure your financial foundation is intact.

– By Jeff Harrell, Director of Portfolio Management at Brightworth

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