Playing by the new rules of financial security
Money Magzine continues it’s current obsession with discussing new financial rules for the post-economic crisis world. They list a few recommendations based on where you are in your career. I’ve abridged them below for you.
Those just starting a career
1. Save money for down payments (you’ll need at least 20%).
2. Buy a house.
3. Diversity your portfolio.
4. Set financial priorities.
I agree with all of them except buying a house. Currently we are in a buyer’s market so buying a house makes sense. But if your job isn’t secure or if you really have no intention of living somewhere for the long-term don’t bother with the house.
Those at the peak of their career
1. Do things to reduce the risk of a layoff such as obtaining additional training.
2. Save money to get the cash you need, don’t borrow against your house.
3. Rebalance your portfolio regularly.
4. Invest as much as you can while you are able to.
These should be followed by everyone, not just those at the peak of their career.
Those approaching, or in, retirement
1. Don’t retire early.
2. Continue to ensure that you are too useful to be fired.
3. Begin converting parts of your portfolio to cash.
4. Keep your retirement withdrawals as small as possible to help rebuild your accounts.
I understand points 3 and 4. But points 1 and 2 are debatable. If you are both willing and able to retire then maybe you should. If you aren’t then points 1 and 2 apply.
