As a long term financial planner I work with clients to ensure that they are ready to weather any type of economic times while working towards their goals. This requires an overarching strategy along with opportunistic actions to take advantage of changes in the current conditions as well as a client’s situation. While it’s impossible to know exactly what the future holds, the next couple of years appear poised as a period of continued growth and stability in the business world. This makes the near future a great time to live by the adage “make hay while the sun shines”.
What does this mean for individuals and businesses?
It is a good time to take stock of your job, employment situation or business picture, and make sure you are maximizing your income and are positioned to weather to next storm when it does arrive.
As an individual, ask yourself now if you are in the right place to work. Evaluate your job and where it’s going (or might go). You may have accepted your current job in 2010 or 2012 and felt lucky about it then. Today, however, it’s a different job market with expanded employment opportunities. Are you working for the company that best matches your goals and ambitions? If not, look where you might be better aligned and consider moving in your industry. A company that is the leading business in your industry is going to be in the best position to weather the next economic downturn. If you are not there already, ask yourself if you have what it takes to join the market leader in your field? If not, work to become the expert that your industry needs.
If you run a business, now is the time to strengthen the offerings that customers are looking for that will carry you through the next pull back. You need to be asking yourself the right questions to get yourself the right answers. Try one of these questions: If we have two more years of prosperity what do I need to do to shift my business to the strongest position for the next down turn? Or, what do I need to change now, to make my company the “go to” provider of our offering in our market area? You might need to make capital expenditures that you have been considering or getting out of a line of business that is distracting you from your core offering. Today is the day to improve things!
Above has been emphasizing the income side of the equation. Saving and investing is the ultimate goal of long term planning. Most of us have had a number of good years of income and not everyone has savings to show for it. Take stock now of your personal results. If you have not built up any savings you need to make a plan to get it started. If you are building up savings, are you investing those saving for the long term? There are a number of people out there that saved money but have missed the first part of the bull market that we are in. That does not mean that you need to miss the rest of this market, just that you need a plan that gets you in the market in a way that allows you to sleep at night.
In the background, during all market cycles, you need to maximize your retirement plan contributions. Whether you contribute to a 401k plan or have the best possible plan designed for your business, more is better! One of the core tenants of all financial planning is there is always underlying uncertainty, so make sure your investments are designed to maximize growth through all market cycles.
This is all part of having a lifetime financial plan, not one designed for the next two years. I advise clients to make financial plans for the next 25 to 30 years. A good financial planner will make sure that whatever economic events happen, you are in a strong position when it is time to retire. The national and local economies will always have ups and downs and it is how you position yourself through these changes that will make the difference. If you do not have a plan now is the time to get it started!
Joseph R. Weiland, CFP®, is a founding and managing partner with Arlington Financial Advisors in Santa Barbara. Visit www.arlingtonfinancialadvisors.com