Do you have kids? Do you have plans for your kids to go to college one day? Have you looked at how much college is going to cost you for just one kid? College is a big investment, but it is a good one. If you begin planning for this huge expense when your kids are young, you won't take much of a hit when the day comes that your teen packs his or her bags and heads off to start a new life at school. This blog will provide you with several ideas and tips that can help you find ways to plan for your kids' college tuition.
For financial consultants and their clients, one of the more personal aspects of the planning process is determining how to plan around potential risks. A financial advisor will tell you that risks exist at both the macro and micro levels, covering everything from disruptions in global markets to problems with an individual's income flow. Each financial consultation should take some time to address the issue of risk. Here are three ways retirement plan advisors think about such concerns.
Evaluating Your Current Situation
Your financial life is a context that includes things like education, income, debts, long-term plans, and even local conditions. This context also interacts with risks that existing in a bigger context, such as recessions, boom times, and changes in the political economy. A young person starting with a fairly high income, for example, has time to make up ground if they make high-risk and high-reward investments right before a recession hits. Conversely, a person on the brink of retirement with a smaller nest egg may have to focus on preserving capital to protect their retirement rather than trying to aggressively grow their wealth.
Appetite for Risk
One of the very personal aspects of this process is determining your risk appetite. Some people are calling their financial consultants the minute their portfolio has a downward swing. Other clients are happy to ride out high-risk investments until they pay off. There's nothing wrong with being one or the other type of person, but you should have some sense of what your appetite for risk is. If you don't, speaking with a financial advisor about the issue will help you learn what level of risk fits your personality.
Risk also has to strike a balance with long-term goals. A couple looking to send a child to college will likely not want to take major risks that could cause the funds to dwindle rapidly if circumstances change. The couple would likely make investments that minimize certain types of adverse risk while also growing fast enough to surpass the goal of funding the child's education.
Similarly, risk profiles and goals change over time. As you move toward working with retirement plan advisors, they'll likely encourage you to start taking some of your risk off the board the closer you get to retirement. Also, they'll encourage you to think about the tax implications of actions like pulling money out of a 401(k) account.Share
13 October 2020