How To Actually Win Financially In 2024! (Ignore Everything Else)
Jan 29, 2024
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Learn how to assess your financial situation, the importance of emergency funds, the differences between buying a car and a house, considering the role of a financial advisor, and understanding index target retirement funds and risk allocation.
Assess your current financial situation by creating a net worth statement to track your progress.
Seek guidance from a financial advisor when transitioning from target index funds to custom portfolios for personalized investment strategies and comprehensive financial planning.
Deep dives
Start the Year with a Net Worth Statement
To set yourself up for financial success in the new year, begin by assessing your current financial situation. Create a net worth statement that lists all your assets and liabilities, showing your starting point. Even if you're just starting out with a checking account and some debt, it's important to document this information. As you make progress and learn more about personal finance, you'll be able to look back and see how far you've come.
Importance of Emergency Funds and Asset Allocation
Having an emergency fund is crucial, especially during times of market volatility. While an emergency fund may not earn high interest, its purpose is to provide stability and immediate access to cash. On the other hand, investment assets like target index funds are long-term wealth builders. Their performance is not measured against a specific index, like the S&P 500. Instead, they focus on asset allocation, gradually becoming more conservative as retirement approaches. It is essential to understand the differences between short-term cash reserves and long-term investments when considering reallocation options.
Transitioning from Target Index Funds to Custom Portfolios
When it comes to transitioning from target index funds to custom portfolios, it's important to seek guidance from a financial advisor. Making changes to your investment strategy on your own, before seeking professional advice, is like changing your lifestyle habits before visiting a doctor for a health assessment. A financial advisor can assess your current financial state, evaluate your risk profile, and help you determine the appropriate investment approach tailored to your needs and goals. Additionally, they can provide comprehensive financial planning beyond just portfolio construction, taking into account factors such as tax planning, insurance analysis, and other aspects of your financial picture.
If you're new to personal finance and want 2024 to be a fresh start with money, what can you do at the beginning of the year to set yourself up for success?
We'll walk you through that question and more in today's Q&A episode!
Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life.
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