4 numbers to know
1. What you own
List all your assets. This includes big items like your home, car or boat. It also includes your savings and investments. You’ll find this information in bank and investment statements, retirement savings and other pension papers, and your will.
2. What you owe
Total up your debts. This includes any student loans, mortgages, car loans, credit cards and other debts. Look for your mortgage records, loan papers and credit card bills.
3. What you earn
Figure out your total income, including your pay, investment income and any other income. Look for this information on your tax returns, account statements and pay stubs.
4. What you spend
Track how much money you spend every month. This includes basics like food, clothing, utilities, and car costs, as well as extra expenses like eating out, going out, insurance, health or dental bills, and money you donate. Look at your bills, receipts and credit card statements. Don’t just estimate – add up bills and receipts for at least a month to get an accurate picture.
Choose your asset mix
The right asset mix should:
• help balance risk with your expected rate of return on your investments,
• fit your tolerance for risk,
• let you to get your money when you need it,
• help provide the growth you need to reach your goals, and
• change as your needs and goals change over time.
Why the right asset mix is important
By holding a mix of investments from the 3 main asset classes – cash and cash equivalents, equities and fixed income investments – you can get a fairly well-diversified portfolio. Deciding how much of your portfolio to invest in each asset class is called asset allocation.
Your asset mix will largely determine the risk and expected return of your portfolio. To get the right mix for you, be sure that your asset mix matches your risk tolerance, financial goals and time horizon.
Y.I.S. Financial Inc. can help you put together an asset mix.
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