Viking Magazine - February 2011 - 27

penses for the past year. " People
are sometime horrifi ed when
they realize how much they're
spending on things like eating
out, " says Pemberton.
Taking a hit forces many
families to rethink their priorities
and spending habits. " Step
back and reassess your goals, "
says Joel Larsen, principal with
Navion Financial Advisors
in Davis, Calif. " Break down
spending into what you want,
what you need and what would
be nice to have. " Once you can
identify areas to trim, adjust
your budget to your new fi nancial
reality.
Since times are so uncertain,
Larsen suggests families cast
their goals in broader terms. For
instance, think of an age range
for retirement, rather than a set
date. Also consider an acceptable
amount of money for core
spending and an ideal amount,
so you can be fl exible.
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In the recent economic downturn,
many people realized they
didn't have as much tolerance for
risk as they thought. Pemberton
says it's important to determine
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your risk capacity and invest
according to your time horizon.
Younger investors can generally
take on more risk, while those
closer to needing money for retirement
or college tuition should
have more liquidity.
To prepare for possible
market volatility, Pemberton
points to the need for diversifi cation:
large cap stocks, small cap
stocks, emerging markets, commodities
and fi xed income. This
can be even more important to
revisit after you have suffered a
fi nancial loss. Pemberton suggests
a balanced approach with
enough cash put aside as an
asset that you are prepared to be
patient if the market goes sour.
Those who weren't prepared a
few years ago had no choice but
to sell when their stocks went
down and now they can never
get that money back.
Don't let a bad investment experience
keep you away from the
markets, says Larsen. However,
you may need to be more active
in choosing how you allocate
your funds. " As the landscape
changes, you have to change
your tactics, " says Larsen. " Now
people need to be re-engaging. "
27.8%
2008
31.9%
2009
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Viking Magazine - February 2011

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