Hanson McClain Offers Top 5 Tips to Get Your Financial Portfolio Back on Track in 2011

SACRAMENTO, Calif., Feb. 16, 2011 /PRNewswire/ -- The question often posed to financial advisors today is "How can I maintain (and potentially grow) my financial portfolio during these difficult economic times?"  While there is not one ultimate piece of sage advice or an investment recommendation that yields the perfect solution, there are steps you can take to get your financial portfolio back on track, according to Scott Hanson, one of the founders of Hanson McClain Advisors, a Sacramento-based independent financial planning and investment advisory firm.  The list is by no means exhaustive, but offers some pointers, encouragement and ultimately advice that may help you face this year with optimism and a financial plan that works best for you.    

Tip #1:  Create a Budget

Be honest with yourself.  By developing a budget, you have absolute definition around what finances are available and accessible to you, and a record of where every dime can and should be spent.  Be sure to include all your sources of income, as well as your monthly expenses.  Remember to account for expenses that come bi-monthly, quarterly or yearly, such as water bills or property taxes, gifts for the holidays, vacations and build those additional expenses into your annual budget.  Review your budget every couple of months and revise as necessary. Creating a budget will be the base of your reality for managing your finances today and into the future.  Create a budget and stick to it—you owe it to yourself.

Tip #2:  Review Your Risk

You know the adage—if the return on an investment sounds too good to be true, it is.  There is no such thing as a free lunch, and there are no completely "safe" investments.  There are risks associated with all investments.  For example, consider municipal bonds.  Municipal bonds are loans that cities, counties and other municipalities use to finance their expenses.  They are attractive to investors because of their tax-free nature.  However, there can be risks associated with them as well.  With many municipalities facing financial issues right now, investors need to take a hard look at municipal bonds—and all holdings—and reduce exposure where warranted.  Be wary of investing too much in anything including long-term bonds, municipal bonds and gold.

Tip #3:  Make a Plan to Get Out of Debt: Leave Your Credit Card at Home  

It is widely held that the best way to reduce debt is to make a list of all creditors, pay the minimum off to all each month, and apply any extra to the smallest balance.  Once that one is paid off, move to the next smallest one.  For example, you may have 10 creditors with a total of $20,000 in debt.  While three of these creditors may comprise $15,000 of the debt, there are small ones that are just as annoying and frustrating as the larger ones.  Focus on paying off the smaller ones, such as the $100 debt on your department store card.  You may find you can then reduce your 10 creditors to just five in a matter of a few months.  While this may not accomplish getting rid of all the debts, it reduces the creditors by 50 percent and, psychologically, will help you feel like a winner in eliminating half your debts.  And for the future, quit spending on credit by not carrying credit cards.  

Tip #4:  Consider Trends and Opportunities  

There are a number of investment trends or opportunities that are popular this year, all based on current economic reality.  Number One: Invest in those areas that are experiencing growth as a result of the improving economy.  Number Two:  Reduce exposure to long-term government bonds to avoid losses as interest rates rise.  Number Three:  Invest in Treasury Inflation Protection securities to hedge against the potential inflation predicted by some.  Today, as always, the key to a sound portfolio is diversification.  Be certain your portfolio has a variety of differing investments, from stocks to bonds to mutual funds and insurance.

Tip #5: Work with an Independent, Credentialed Advisor to Maintain or Rebuild Your Financial Success  

There may come a time when you need or desire the assistance of a financial expert.  When that time comes, be sure to do your due diligence to ensure you've chosen an advisor who is competent and trustworthy.  At a minimum, he or she should be credentialed as a CFP®, or CERTIFIED FINANCIAL PLANNER™.  Check out their background at www.finra.org.  Ask how he or she is compensated, what conflicts of interest might exist and request a profile of what his or her typical client looks like.  Ask others for recommendations on financial advisors they trust.  Know that your relationship with your advisor should be mutually honest, respectful and confidential.

About Hanson McClain

Founded in 1993, Hanson McClain Advisors, Inc. is an independent financial planning and investment advisory firm whose independence helps advisors to fulfill their fiduciary responsibility to clients – not investment product makers.  Hanson McClain advisors are client-driven, not commission-driven. Hanson McClain also leads the Hanson McClain Retirement Network, a team of independent marketing partners that targets the utility and telecommunications industries. As a good corporate citizen, Hanson McClain is involved in making the community in which they work a better place to live.  For more information, visit www.HansonMcClain.com.

SOURCE Hanson McClain Advisors