By Stephen Kyne
There’s nothing quite like the start of a new
year to pause for a moment and take stock
of your finances. After a year as emotionally
charged, for many, as 2012 was, with a hotly
contested election and widespread economic
uncertainty, it is important to evaluate changes
in your personal economy and revisit your
financial goals.
If you have resolved to make improvements
to your finances, it is important to first be sure
that you have a stable foundation on which to
build. Evaluating your cash reserves to ensure
they are adequate to meet your needs, as well
as an annual check of your various insurance
policies are two of the most important steps
toward ensuring your long-term investments
will not have to be liquidated at an inopportune
time because of some emergency.
As details of the “fiscal cliff” resolution become better understood, it may be important for you to reconsider your savings and investment strategies to capitalize on, or counteract, any changes in the tax code.
Once you’ve done your annual financial check-up, you can begin to turn your attention to events in the world as they affect your investments. Looking into 2013, we expect:
• Continued steady domestic growth, on the order of 2-3 percent real GDP.
• Continued unemployment ranging from 6.5-8 percent. • A marked increase in U.S. industrial growth as geopolitical and economic conditions continue to make the U.S. an attractive place to build manufacturing facilities.
• New home construction, and related businesses, should fare well as historically low new home inventories and interest rates team-up to produce favorable conditions for growth.
• Eurozone countries will continue to struggle to find solid footing.
• American exports should thrive, as a relatively weak dollar continues to make American goods competitively priced abroad.
• Historically low interest rates will continue to depress the market for many bonds.
• Changes in tax treatment on interest and dividends for many investors may help the market for tax-free municipal bonds.
Remember, these are all forward-looking statements and any piece of news could come out tomorrow, rendering them woefully inaccurate.
It’s important that you work closely with your financial advisor to stay informed of any news, and make changes accordingly.
If you are not currently working with an advisor, the beginning of the year presents a wonderful opportunity to meet with one, set goals, and make serious progress toward achieving them. Just as hiring a personal trainer will help you make your fitness goals a reality, working closely with a trusted financial advisor can give you the direction, knowledge, and discipline you need to achieve your financial goals.