Get Fiscally Fit in 2014, Part II

Last week, we began a special series on how to get fiscally fit in 2014. The first installment was all about taking an inventory of all of your assets. Here we took a page from corporate CFOs, as they regularly are tasked with determining the precise value of their company’s assets. The result of that inventory should be that you now know how much money you actually have, and in what type of asset class that money resides (equities, bonds, real estate, gold or silver coins, checking account, CDs, etc.).

Today, we are going into Part II of the series, and that involves doing an asset allocation review. This is the time to dig down deep into precisely where your assets are, and by that I mean knowing specifically which stocks, bonds, exchange-traded funds (ETFs), mutual funds, variable annuities, etc., you currently own.

You also need to know how much you own of each security. Your goal this week is to take an inventory of all of your securities holdings so that you can see if there are any glaring weaknesses and/or omissions in your asset allocation.

Once you know, in percentage terms, how much of your total investment portfolio is committed to stocks, how much to bonds, commodities, cash, etc., you can make the necessary adjustments to get the desired mix of assets where you want them.

I am of the opinion that equities are going to see a lot more volatility in 2014 than they have in the past, and that means both opportunity and risk for your money in the months ahead. But before you can make intelligent decisions to reallocate your capital, you first need to know where that capital is, and where you need to make alterations.

Next week, we’ll do an inventory of all of the income streams your money is generating. If your primary goal is to capture high yield and dividend income from your existing assets, next week’s lesson is aimed directly at you.