Your 2002 Financial Guide

Steps to take now to make next year better

Leslie Kane

The tragic events that have rocked our nation will stay in our psyches forever. Maintaining a sense of normalcy requires an action plan for the future, including developments that could affect your finances. Times have clearly changed, and so have fiscal dreams. But keep in mind that while political and economic crises may continue to have a gut-wrenching effect on the market short term, their impact will fade eventually. That's precisely why experts say you should invest with a long-term perspective.

It's also why our 2002 Financial Guide emphasizes developing and implementing a sensible long-range financial plan. Because history can be one of the best teachers, you might start by recalling some lessons from the past year. Amid the market uncertainty, we've all been reminded that financial security isn't a given; ensuring it takes hard work and patience. Perhaps you've also learned that:

You're not as brave as you thought. Maybe you considered yourself highly tolerant of portfolio risk. Then the reality of losing money turned you neurotic, and desperate to hang on to your savings. Watching the prices of high-flying stocks such as JDS Uniphase dive from triple to single digits has been sobering for all investors, particularly those who had never before witnessed a market plunge.

Brokers aren't your buddies. We've seen many of the investments they recommended capsize. We've been warned that some brokers have mandatory sales quotas, and that some analysts may collude with the companies they cover. Most brokers and analysts are ethical, but you may now wonder about the advice you once took on good faith. That skepticism is healthy.

Knowing a few investing buzzwords doesn't make you a stock pro. It was chic to talk about stock splits and the irrelevance of P-E ratios when all the market lights were green. But now it may be unpleasantly clear that you need to know a great deal more about a company before you sink money into it.

If you're among the many doctors who have been badly bruised by Wall Street's tumble, getting your financial house in order is more important than ever. This guide offers a three-pronged approach to help you do just that.

In the first section, Planning—The Key, you'll define your financial goals and vision and shape a strategy for fulfilling them. In Finding More Money, we'll help you squeeze every legitimate source of extra cash by trimming debts, saving on taxes, and taking advantage of new pension plan breaks. In Investing Wisely, we'll suggest where to put any extra money you've got, without taking unwarranted risk. Even in this shaky market, opportunities exist.

The money moves you make during the next 12 months can be crucial. We—and the experts we consulted for this 2002 Financial Guide—are here to help you make the right ones.

 

Leslie Kane. Steps to take now to make next year better. Medical Economics 2001;21:7.