Quick! Count your fingers. Got all 10? Good! That means you didn't lose any in a pyrotechnic display of Independence-Day bravado.
Now would be a good time to perform a virtual digit-check of your portfolio, too. Master investor Peter Lynch recommends a semiannual checkup, and David and Tom Gardner follow that advice with their Motley Fool Stock Advisor recommendations. Six months is a long enough time period to dissuade you from focusing on short-term events, but it's long enough that you don't miss significant changes occurring in your company, its business, or even the markets as a whole.
It's also a good time to look at your entire financial picture. A five-step, six-month checkup ensures that you're still on track toward achieving your personal financial goals. Let's take a look at those steps in greater detail.
1. Check your debt
Make sure you haven't allowed credit card debt to sneak up on you since your last tune-up. While you may have paid down your debt balances before you started placing money into the stock market -- always a smart move that allows for instantaneous high returns on your money -- make sure you haven't grown complacent since then. A car repair or some other major expense may have surprised you. Before committing more money to the market, get rid of the debt.
2. Fund the e-fund
Another smart move to make before investing is to put aside enough money for an unforeseen emergency. Keep it in a highly liquid account, like a money-market account, so that you can access it readily. Although you know it's supposed to be only for emergencies, sometimes the temptation is too great, and you dip into it for non-essential purchases. Is the e-fund fully funded? If not, get it back up to speed before buying your next stock.
3. Keep Calamity Jane at bay
Your house and your car are insured for fire, theft, and the vagaries of nature or the whims of feral drivers, but have you protected yourself yet -- really, your ability to make money -- from disabling illnesses or accidents? You came through this July 4 unscathed, but what if you're not so lucky next year, and you can't work and earn a living? Not only do we need life insurance, but disability insurance can also offset any loss of earning power if we foolishly -- or even not-so-foolishly -- end up crippled or disabled and without a means to support ourselves or our families.
4. Plan your estate
OK, you've put if off long enough. Now is the time to finally get a will. Without a will, someone else, not you, decides how your estate will be settled. Sure, you may not be as rich as Croesus (yet), but everyone needs a will, and your family should have the comfort of knowing that after you die, your assets will be distributed according to your wishes. We don't like to consider our own mortality, but without a will, the state decides who gets what, regardless of whether it's fair and equitable.
5. Look after your investments
Now that you have a proper foundation in place, you can return to your portfolio and do that stock checkup you've really been itching to do. But beyond simply checking your stock's story to make sure the original reason you bought it is still in place, ensure that you're putting enough money away into your investments. Investing Foolishly in the stock market is one of the surest ways to accumulate wealth for the future. Make certain that you're putting enough toward those goals to be able to achieve them.
Times change, people change, and circumstances evolve. Take the time now to ensure that all of the basic building blocks are in place to allow you to continue constructing a sound financial future for yourself. Like a short fuse on a firecracker, a personal financial plan without all of the elements attended to is a surefire way to have that plan blow up on you.
The Motley Fool can help you keep all your digits in place with these helpful links:
- Motley Fool Credit Center
- Motley Fool Savings Center
- Motley Fool Insurance Center
- Estate Planning: Wills
- 13 Steps to Investing Foolishly
- TMF Money Advisor
If you need to get your finances in order, check out the newest addition to our newsletter family -- Motley Fool GreenLight .
Fool contributor Rich Duprey safely enjoyed the Fourth of July fireworks from a distance -- atop the deck of a boat floating in the East River. You can see his holdings here. The Motley Fool has a disclosure policy.