6 Small but Impactful Financial Steps for High Net Worth Individuals and Business Owners in 2015

retireFor a moment, put aside the country’s economic prospects. Focus on your own personal financial outlook and that of your own business. We’re already more than a month into 2015. Are you seeing financial improvements? Do you have a solid investment and financial plan for the year? Personally, I think the country’s in an improving economy right now with lots of opportunity for smart business owners and high net worth individuals (HNWI). But financial conditions can change quickly. For you to reach your 2015 business and personal financial goals you need financial insight. Here are six ideas that may give you greater opportunities to grow your wealth in the remainder of 2015:


1. Consider adding stocks

It looks like the economy and businesses will continue to grow modestly in 2015. If that happens stock prices should rise over time, just like they have over the past five years.

According to Investment News, U.S. stock markets are predicted to continue their bullish course for a seventh year. Some forecasts call for U.S. equities to return 5% to 9%, assuming the economy grows at about 3%. That’s the type of environment that could bring strong growth to anyone who invests in stocks. Talk to your financial advisor about adding more large-cap stocks to your portfolio. Of course, stock performance isn’t guaranteed and markets can rise and fall at any time.

2. Prepare for rising interest rates

You can expect to see more volatility in 2015. The stock market has had a three-and-a-half year run without a true correction and the Federal Reserve is very likely to raise interest rates. With the low interest rates we’ve had for about six years anyone who’s relying on bonds for income has suffered. One way to prepare for rising interest rates is by using a laddered bond portfolio. That means owning investment-grade bonds of different maturities. Again, ask your financial advisor’s opinion on this idea.

3. Build up an emergency fund

Too many high net worth individuals (HNWI) and business owners have a habit of spending most or all of their income when the economy is expanding. They only begin to save money when their bargaining power and disposable income disappear during a contraction. The Motley Fool says more than one in four adult Americans have no emergency fund while another 24% only have enough to cover up to three months’ worth of expenses. Less than a quarter have the recommended six months or more of emergency funds available. How’s your emergency fund?

With the U.S. economy as healthy as it’s been in years, consider setting up or adding to your emergency fund. It can keep you from scrambling for cash should an unexpected expense strike. Set aside money each month. The best part is that once you’ve hit your emergency fund target, you can redirect those savings toward your investment portfolio each month with a budget already firmly in place.

4. Adjust retirement plan savings to new 2015 limits

The new year is a good time to familiarize yourself with tax law changes that may impact your financial position in the coming year. Compared to five or more years ago, fewer business owners and HNWIs have access to pension plans. Your retirement planning success depends on remaining proactive and increasing your savings where you can.

The good news is maximum contribution limits for employer sponsored 401(k), 403(b) and most 457 plans are increasing for 2015. Taxpayers are now able to make elective deferrals of up to $18,000.

Additionally, if you are a taxpayer over age 50 you can save an additional catch-up contribution of $6,000 (up from $5,500 in 2014), allowing for a total of $24,000 in contributions.

5. Look abroad for investment opportunities

Last year the economy in many countries experienced slower growth than expected. As a result many countries added or strengthened their growth policies. These policies should continue and should lead to stronger foreign economic growth. With your financial advisor, take a look at adding broad-based international equity investments. Consider, though, that low interest rates combined with the currently rising U.S. dollar could make foreign fixed-income investments less attractive.

6. Avoid the rush to online financial statements

I may sound old-fashioned here, but seriously consider this next idea. Calling your financial numbers up on your laptop or tablet does save trees, but online financial statements also have some drawbacks. With your statements online it’s easier for you to neglect to review transactions, fees, and other details. I vote for print statements.

On a smart phone, tablet, or laptop screen your financial numbers are harder to see because they appear in a smaller typeface. Columns may bunch together in hard to decipher ways. Online statements come with benefits – speed, mobility – but the plusses simply don’t include helping you detect account problems as effectively as with paper statements.


Sources: Edward Jones Perspective, Outlook 2015, 5 Solid Steps to Start the Year





by Gene Thomas Offredi, CFP®, RFC™ Contact Gene at the Summit Investor Coach website or call  203.453.1017. Download Gene’s free guide Plan, Retire, Relax.

Plan retire, relax - your retirement workbook
Download my NEW free eWorkbook by clicking here.