The U.S. Federal Reserve earlier this month said the median net worth of the American family fell by almost 40% between 2007 and 2010, wiping out 18 years of economic progress and cutting middle-class wealth back to levels not seen since the early 1990s.
The central bank study really underscores the deep-and-lasting pain inflicted by the global financial crisis of 2008-2009.
And it reminds us how important it is for investors to take control of their own financial destiny.
On that last point, at least, the timing couldn't be better. June marks the end of the second quarter, and the mid-point of the year.
That makes this a perfect time to assess your finances, your objectives and your plan for achieving those goals.
Here are some tips that will help you make that assessment.
- Polish Your Plan: There's an old adage that says, in essence, "If you fail to plan, you plan to fail." Nowhere is that more true than with investments. The year's mid-point is a perfect time to update your investment plan. If you don't have one, start one. This plan should include your long-term financial goals, your risk tolerance, your current assets and liabilities, and any special considerations that will affect this plan. In short, design your plan to ask and answer: Specifically what is it that you're trying to achieve in life? Don't ignore your dreams – as unlikely as they might seem right now. By being honest about all that you hope to achieve, you're a lot more likely to actually make it all happen. And we here at Money Morning promise to do all we can to help you achieve your goals.
- Review Your Holdings: Once you've adjusted your plan (or created a new one), take a look at your investment holdings. Does everything still fit and contribute to that objective? Once you've made that determination, take a look at the individual holdings from a performance/potential standpoint. Is the reason you purchased each security still valid? How is each holding performing? If the stock, bond or ETF you're holding is lagging in performance, or even showing a loss, is there still enough upside potential to warrant keeping that particular security? If a security is showing a big loss, or now lacks the upside promise it once had, don't be afraid to prune it.