Investment Planning for Major Life Changes
Investment planning is a lifelong activity which, for most investors, is geared to lifetime major milestones and lifecycle events.
Marriage, having children, buying a home, saving for college tuition, and retirement are the high factors of many people’s lives. Despite these life events being a source of happiness, they bring financial obligations, and engaging in long-term investing is an important strategy for meeting those obligations.
But life can turn on a dime and unexpected events can impact – or even derail – even the best investment planning efforts. Job loss, divorce, major illness, or an unexpected death can jeopardize the plans that investors have for their lives, necessitating a reassessment of financial priorities.
Sound investment planning includes preparing for unforeseen events and working with an investment advisor who can help you build a portfolio that protects you, as well as funds your goals. Here are a few broad recommendations for approaching the task.
Understand Your Needs and Goals
The key to establishing a sound investment plan is understanding your needs and goals. Saving money to buy a home or real estate is different than saving for retirement. The time horizon is shorter and requires a mix of investment and saving instruments that will help you reach your goal faster. Saving for college tuitions offers the advantage of 529 Plans and Coverdell Education Savings Plans that give you tax-deferred options.
Understanding the various investment, saving and management options that can help you reach specific goals is important. However, it requires a discussion and clear vision of what those goals are before an effective portfolio of investments can be built.
Bear in mind that unexpected events (like the Coronavirus Pandemic or unpredictable market conditions) may impact your savings plan. Build in some savings capacity to cover some of those costs.
Discuss your vision and financial situation with an investment advisor as a starting point, and make sure you and your spouse share the same vision about financial planning before getting started.
Understand Your Situation and Options
Start early – as early as possible – and don’t overlook any investment options that can help you achieve your goals and financial security over a period of time. This means participating in your company’s 401(k) plan (if the company has one) and establishing a separate Roth IRA for a dual-track retirement planning strategy. If your company has a match in the 401(k) plan, be sure to defer enough from your annual income to qualify for the match. That’s free money and constitutes a safe way to add to your nest egg; it builds over time to significantly boost your retirement savings and help you meet your retirement goals.
For college tuition, start saving as soon as your baby is born. Yes, babies cost money, and you have a lot of other expenses to think about through your different life stages. However, when that first tuition bill arrives, you will be grateful for having made the sacrifice early and having contributed regularly to the education savings account.
Special Needs Investments and Financial Plans
As life changes, you may encounter new needs or new challenges. Sometimes, specialized savings and investment opportunities exist that serve these needs.
For example, if you have a child with a disability, investing in an Ohio STABLE account can help fund the child’s education, medical care, living costs, legal fees, transportation, assistive technology, and more. Importantly, the money you save in a STABLE account does not impact your child’s eligibility for government assistance.
Your advisor can guide you to develop an investment portfolio and develop any special needs-related investment planning options that may fit your circumstances and help you make important investment decisions.
Preparing for Major Life Changes with Investment Planning
Divorce, sudden illness, an unexpected death, and economic downturns are among the most disruptive and major life events that people can face, and they all necessitate major changes in savings plans and your investment strategy. Talk to your investment or financial advisor about how to prepare for the unexpected to protect your savings and your life goals.
It’s never too early to start saving and investing for the future. Contact your Barnes Wendling advisor to start the discussion about investment planning, your financial goals, and current situation.
Related Insights
Featured Post
Featured Client Testimonials
BW is a true partner to us. Their knowledge, expertise, and service are a valuable resource to us and play an important role in our success!
John Allen - Vice President of Finance, Kaufman Container
Featured Client Testimonials
I appreciate the exceptional tax advice we received over the years. The (BW team) has a good grasp of our business needs. Thank you for your excellent service.
John Griffiths - Owner, Rae Ann, Inc.
Featured Client Testimonials
The BW team has been fantastic to work with; both the team member at our office as well as at the partner level. Any issues or concerns are handled very efficiently and effectively.
Kelley Needham - Chief Executive Officer, Epilepsy Association
Featured Client Testimonials
Barnes Wendling has been our company accountants for over seven years. Their knowledge has been instrumental in helping us grow strategically during this time. And although we’ve seen many changes in our economy that we cannot control, we’ve always been able to trust the Barnes team to be by our side. The Barnes team feels like family. We can’t thank them enough for their support!
Christine Kloss - Controller, AT&F
Featured Client Testimonials
Barnes Wendling has been our company accountants for over 15 years. During this time, the business has grown exceptionally, and Barnes has kept pace, providing accurate, quality advice. Our finances are more efficient than ever, and the expense of hiring Barnes has been a definite positive add to our bottom line. I give my highest recommendation to their firm.
David Miller, MD - President, Retina Associates of Cleveland
Featured Client Testimonials
Barnes Wendling has provided us guidance and recommendations that have strategically helped strengthen our business and position ourselves for growth. We needed to hire a new VP of Finance and Controller this past year, and they were instrumental in helping us find the best candidates for our company.
Sara Blankenship - President, Kaufman Container
Featured Client Testimonials
We value the trust, accuracy of information, and reliability of Barnes Wendling and Mike Essenmacher personally. Mike has been instrumental as a trusted advisor on accounting, tax, and personnel issues. His advice is always accurate, and he is very reliable. His associates are also very talented.
Dominic Ozanne - President and CEO, Ozanne Construction Company
Featured Client Testimonials
We value Barnes Wendling’s expertise with all things accounting so we can operate our business using our strengths and allowing them to be our experts. They have also brought me a few business sale opportunities to allow me to grow my assets.
John Gaydosh - President and Metallurgical Engineer, Ohio Metallurgical Service
Featured Client Testimonials
Barnes Wendling (especially Lena) did a great job with our financials. Everything. It is extremely refreshing and comforting to know that all of our numbers are not only correct, but they are in the right place(s). Your diligence and reporting truly does make me (personally) feel better.
Thomas Adomaitis - Controller, Bialosky Cleveland
Featured Client Testimonials
I can wholeheartedly tell you that I have yet to work with an audit or tax team that have been more helpful, easy to work with, and committed than the team at Barnes Wendling- I have been through three different firms in the last few years.
Michelle Saylor, Former Controller, Aero Mag
Featured Client Testimonials
Floyd Trouten at Barnes Wendling CPAs is an “expert’s expert” when it comes to M & A accounting. Not only does he understand the evolving details of the Tax Code but he also sees the fine points of their application for owners, managers, investors, and financiers.
Mark A. Filippell, Western Reserve Partners
Featured Client Testimonials
The service is amazing at Barnes Wendling CPAs. The benefit is worth more than the cost. Sometimes it’s true that you get what you pay for.
Mark Boucher - Former Owner, Castle Heating & Air