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It’s best to spot red flags in your financial plan early on, that way we can address them before it’s too late. Can you name your investments? How often are you meeting with your advisor? Find out if your answers to these and other questions are problematic.

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Show Notes

Today we’re sharing some potential red flags you should be aware of in your finances.

Can you name a stock that makes up more than 10% of your portfolio?

If your answer is yes, that would be a red flag. You don’t want to have one individual stock position making up more than 10% of your portfolio. If you do, you’re starting to get too many eggs in one basket.

For example, if you had two elevators side by side and one elevator had one string holding it up and the other had hundreds of strings holding it up, which one would you get in? Obviously, you’d choose the second one. That’s diversification.

You also need to consider emotional versus logical decisions. Sometimes we can become emotionally tied to something. And you think if you sell something you’ll miss out on potential gains of that one stock.

But remember, you can always sell the stock and put it into a more diversified fund where you could potentially get gains over time.

How much income will you need in retirement?

If you are close to retirement and you don’t know how much you’ll need in retirement, that’s a red flag. Everyone spends different amounts, but you need to know, generally speaking, how much money you need in your bank account each month.

How often do you meet with your financial advisor?

If you’re never meeting with them or having spotty, random meetings without structure, that’s a red flag. Everyone’s comfort level is different, but you should still be meeting regularly.

Listen to the full podcast or use the timestamps below to jump to a specific section.

[4:33] – Surplus

[7:26 ]– Company retirement plan

[10:37] – 401k or IRA

[14:43] – Name a stock

[18:02] – Know your number

[20:39 ]– Financial and retirement plan

[22:46] – Meet with advisor

[25:47] – Mailbag: Keep working

Thanks for checking out this episode. We’ll talk to you again soon.

“You don’t want to have one individual stock position making up more than 10% of your portfolio. It’s starting to get too many eggs in one basket.”

-Scott Sierens