Date: February 21, 2022

Does Your Financial Plan Need a Check-Up in 2022?

If ever there was a year to review your financial plan, 2022 is it. We’ve come off three consecutive years of solid stock market gains, increasing investor wealth (at least, on paper) even as we continue to plow through the COVID-19 curse. 

In other words, you may be experiencing a change in both circumstance and attitude as 2022 unfolds. It’s time to review your high-net-worth investing strategies, your long-term investment plans, and most of all, your post-COVID life priorities.


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Annual Reviews Are Part of the Plan

Successful investors do a thorough portfolio review at the start of the year for several reasons. And you should too! It’s a perfect time to look closely at how your retirement and investment accounts performed in the previous year, now that all the 2021 benchmark results are compiled and published. 

Rebalancing your investments is a crucial part of your annual review. With the S&P 500 gaining 26.9% last year, you probably have a fair share of winners (and, inevitably, a few laggards) in your portfolio. It’s always lovely to see your wealth grow, but it’s equally important to protect your gains and re-establish your risk exposure.

For 2022, rebalancing probably requires you to reallocate some market gains to other strategies and asset classes. Failure to rebalance your portfolio defeats your carefully crafted asset allocation plan. 

Rebalancing rids you of highly concentrated single-stock positions while preserving your wealth to meet your retirement goals. You may also need to adjust your investments to account for federal, local, and estate tax changes. 


COVID Concentrates the Mind on Life’s Goals

We’ve focused on realigning your portfolio to match your asset allocation percentages. Still, your annual review might reveal how your goals, priorities, and attitudes have evolved as we enter another year of COVID. That might prompt you to adjust your asset allocations before rebalancing your investments. 

New allocation ratios often reflect fundamental shifts in thinking about life’s goals after a period of introspection, as might be expected following several years of COVID.

Let’s explore many reasons to re-examine your asset allocations.

long road with word retirement

Changing Your Retirement Plans

COVID-19 may have caused you to re-evaluate your thoughts about work and career. You may be now contemplating early retirement to allow time to do other things, from travel to hobbies. 

New goals raise the question of whether you have enough money to retire early, and if not, how to get there. 

You might have accumulated millions in wealth, but it won’t do much good if you lose your health and cannot accomplish the things you want to do. Therefore, protecting your wealth becomes even more vital, ensuring you are appropriately invested for long-term growth so that you do not outlive your money.

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Changes to Your Home

Because of COVID, maybe you have experienced working from home for the first time. After spending so much time at home, you might be thinking about extensive renovations or relocating to new digs. These changes may require considerable resources, and your financial plan must specify how you’ll pay for them. 

For example, will you have to work another couple of years to finance a new addition to your home, and if so, is it worth it? Conversely, you might decide that downsizing makes sense, freeing up your money for other things – including early retirement. 

If you choose to proceed, you’ll need to update your financial plan and map out how the impact of the changes will ripple through other areas, such as tax and estate planning. 

Lifestyle Changes

The post-COVID reality may cause you to pursue a different lifestyle, especially if you now have more money to spend, save, or invest. That’s a very personal decision and encompasses a lot of territory. However it manifests, you’ll want to know how the changes will impact your wealth and how they will affect others who depend on you. 

See how different personality types may adapt to life after COVID-19.

At one end of the spectrum, you may give up things you used to do so that you can accumulate extra money to fund new goals. Oppositely, you may see little value in waiting to achieve future goals and revise your lifestyle accordingly. Wherever the decision lands, you’ll need your financial plans to address the changes head-on. 

stacks of coins increasing in height

What Constitutes a Comprehensive Plan?

Financial planning focuses on your current situation and long-term wealth goals, along with ways to achieve those goals. A comprehensive financial plan must contain many elements, including a long-term investment plan, retirement strategy, risk management plan, tax reduction strategy, and estate plan. 

A professional financial advisor helps you develop, oversee, and adapt your financial plan, maximizing its relevance to your evolving reality.

Your financial plan should closely support your (new) priorities in both your current spending and your long-term wealth accumulation. An important focus should be managing your financial risk through liability coverage, property insurance, disability, life insurance, and trust accounts to protect your assets. 

Risk is central to your long-term investment plan, which should balance risk tolerance against capacity. Other plan priorities may include designing your estate plan to protect your heirs and reducing your taxes over your lifetime.


Feeling discouraged from previous financial advice? 


Time For an Expert Second Opinion!

Whatever your circumstances, having an updated financial plan to address your current and future economic challenges is much better than simply worrying about them. As a financial advisor in Connecticut, my job is to create financial plans intended to achieve your goals and then adapt the plan to your changing needs. 

I can also show you how to recover from financial loss. The best part: there’s no obligation to work with Heritage.

If you aren’t satisfied with your current situation and are considering changing investment advisors, it’s time to get a second opinion in New Haven. Contact me today to begin the process – your money (and your psyche) will receive the attention they deserve.

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Paul Schatz, President, Heritage Capital