Here are the 5 Most Common Financial Questions for Single People
If you find yourself alone either by choice, quarantine, divorce, or the loss of a spouse, please remember that although you may feel alone, you are not. Many people in these circumstances turn to friends or to the internet/social media platforms to gather information on how best to proceed with ones finances. The purpose of this article is to answer five common financial questions we regularly see among our single clients from our decades of experience as Financial Advisors and Certified Financial Planners ™.
- Should I purchase a new home? The purchase of a new home is deeply emotional, particularly in the cases of divorce or death, because it signals a new beginning or chapter of life. We encourage our clients to rent for a year before making this enormous decision for a variety of reasons, but here are a few to consider: How do you know you will like your neighbors/neighborhood? Where will your children/grandchildren be living a year from now? Will one year of time allow you to settle into a budget that you can rely on? Before you take a significant portion of your net worth to buy a home, give it one year of time to settle in to your new normal.
- What should I do with my investments? We usually encourage our clients to take on less financial risk with their assets after divorce or death. Both of these life events leads to a lot of emotional trauma and the last thing we want to see our clients experience is financial trauma.Going through the Coronavirus, we can all see how fragile the markets can be on a moment’s notice. The Dow Jones Industrial Average was as high as 29,568 on 2/12/2020 and as low as 18,213 on 3/23/2020, a little over a month later. That is a decline of 38.4%. Taking less risk after a divorce or death will help soften the downside of your investments, and limit the list of things to worry about.
- Who will take care of me when I am older? If you are in good health and depending on your age, a long term care policy may be a good idea. Most parents and grandparents don’t want to be a burden on their family. A long term care policy can be a good solution by shifting the financial and physical burden of dependency onto an agency that specializes in this type of care. The cost varies and depends on a lot of factors, but it’s definitely worth exploring.
- Will I outlive my assets? This is one of the most common questions we hear post-divorce and death of a spouse. It really starts with a budget to understand how much money you spend in a given year and to then understand what level of income your assets can support. Once you understand your goals and needs, many financial institutions have the software to simulate thousands of different scenarios to see the impact to your financial assets long term. The more goals and expectations you have, the more assets you usually need to meet these goals. Have a plan and understand what sacrifices or changes need to be made in order to NOT outlive your assets.
- How do I generate income from my financial assets in the post coronavirus world? Many consider this low interest rate environment difficult to generate income. As an example, the 10 Year Treasury Bond is paying .597% as of 4/29/2020. In our entire working careers, we can’t remember a time when the yields were so low. To help meet this challenge, if suitable to your situation, consider exploring Covered Call Options Strategies, annuities, and/or dividend paying stocks to potentially boost the yields in their portfolios.
The knowledge is available to you, you just have to find the time to educate yourself, create a plan, and then monitor it. If you prefer to utilize the services of a Financial Professional, find one that you can trust and depend upon. Make sure they educate and provide all the available options to you, so you can make the best informed decision for your new life. Do the homework to ensure that the financial advisor(s) work at a reputable company, they have your best interests in mind, and they have a fiduciary obligation to YOU!!!
The information contained does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Investments mentioned may not be suitable for all investors. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Raymond James and your Raymond James Financial Advisors do not solicit or offer residential mortgage products and are unable to accept any residential mortgage loan applications or to offer or negotiate terms of any such loan. Long term care insurance policies have exclusions and/or limitations. The cost and availability depend on factors such as age, health, and the type and amount of insurance purchased. There are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.