Financial Discovery For All

Melvin Carrington Smith Sr. is opening eyes to financial empowerment

it turned out, there were some gaps I had not thought about. I didn’t have enough home-owners insurance, and I didn’t have a will,” he says. The financial planner helped Smith map out a plan enabling him to retire from his post as director of marketing at Bell South at age 48. Smith was also able to save enough to pay for all five of his children to attend college. Now he works simply because he likes financial planning, not because he needs the additional income.

He says that most people can attain similar objectives by focusing on some basic principles:

“You need to know where you’re going to start and where you plan to end up,” Smith says. “Ninety-eight percent of those at retirement age are not able to live comfortably because they haven’t set clear-cut goals in order to make it happen.” Smith suggests writing down a list of clearly defined priorities that encompass all your financial objectives: How much do you need to put away to send your children to college? When do you want to retire, and how much do you need to save and invest to meet that goal?

FDF encourages people to save as much as they can of their after-tax income and to invest it intelligently. Smith says it is important to ensure that you have proper diversification of assets. “Don’t put all your eggs in one basket and focus on a single stock,” he says, citing the examples of Enron and WorldCom. He advises spreading investments over stocks and bonds and allocating portions of your portfolio to value, growth, large, small- and mid-cap companies.

You should also consider what will happen to your assets in the event of an accident. Make sure you have enough disability and life insurance to cover your family’s financial obligations, such as your mortgage and future living expenses. You should also have a will that determines how your wealth will be distributed. “You need to protect the wealth that you have,” says Smith.

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