Smart Money Moves For The New Year

Putting things in place now can enhance your portfolio in 2006

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invest in efficient, smaller firms stand to be big winners.

Increase international stock exposure. “You’ve got to have at least a 10% to 15% allocation of your portfolio in international [stocks] today,” says Sanders. There is much faster growth happening outside the U.S. these days, and Sanders advocates buying an international mutual fund. Country-specific funds for China and Japan have been the hot sectors of late.

Reassess your insurance needs. Be sure you have enough insurance to cover all of your property and potential liabilities. “Review what you own and what your vulnerabilities are. They could include a teenaged driver, mean dog, or a new pool,” says Neiser.

Update your homeowners insurance. Hinson explains that since the housing markets have been so strong, “there has probably been an increase in the value of your property. So you want to make sure you are fully covered.”

Go to the doctor and dentist. If you pay for health insurance premiums, use the services, because if you become ill, you cannot earn income. “Make sure that you take advantage of the health insurance you are paying for,” says Hinson.

Update estate planning documents. Make sure wills, your power of attorney, and your medical power of attorney documents reflect the births, deaths, and divorces that have occurred in the family during the previous year.

Reassess your business plan. Meet with a financial adviser and make sure your business is serving your cash needs as it grows. “You want to m
aximize the tax laws, maximize the investment strategies, and look out for your heirs so that you can create a legacy that doesn’t die with you,” says Sanders. “We are creating more wealth now, with more African American-owned businesses than ever before, but we’re not doing enough planning to preserve, protect, and transfer that wealth.”

Review business insurance needs. Last year, Sanders worked on a strategic financial plan for Chester Fulton’s business in Pennsylvania. Fulton is one of four partners who operate the ADCM L.L.C. Community Correctional Facility in Philadelphia, which houses prisoners serving short sentences. Fulton, 49, says the facility has been operating for a little more than a year, largely because his accountant referred him to Sanders for advice on getting the business off the ground.

Fulton says, “Steve helped us tremendously because he guided us to United Bank, which wound up helping us get money for renovations and operating costs, which helped us get our first contract.” Sanders is Fulton’s personal financial adviser, and Sanders knew it was important to integrate the business into Fulton’s overall financial plan. “Steve helps out with the company because he’s looking out for my interests and my family’s interests.”

Perhaps the best thing Sanders did for Fulton’s business was make sure that he and his partners understood the importance of “key man insurance.” Sanders structured insurance policies that would take care of the needs of the partners’ families in the event any of the partners died or became disabled. That way, the business would not have to be liquidated for

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