Some of the time-tested advice on financial security has to be changed in the current economic times. Some tips from the editors of Money magazine:
* Judging risk is about making or missing financial goals. Buying stock when it's a bargain or waiting for the upturn may not be best if you will need your money in the next decade. Scaling back on stocks might be better even if you miss the next upturn.
* Increase your available cash. Forget six months' living expenses. Try to gather two to four years of living expenses in low-risk savings.
* Diversify investments the right way. Check funds you own or want to buy at Morningstar.com's Instant X-Ray Tool. Buy a fund that invests up to 20 percent in emerging markets and the rest in developed countries. Then consider a high-yield fund and a broad U.S. bond fund and you will be well diversified.
* Borrow cautiously. Get a mortgage you can afford for the life of the loan and make a down payment of 20 percent.
* It's still a good idea to buy a home. Have modest expectations for a home as a wealth builder. Owning gives you a hedge against rising housing costs and it results in a forced commitment to save. In the end, you own the house and no longer have to make payments.
* Forget early retirement. Delaying retirement by just one year could increase your annual retirement income by 9 percent, according to the Urban Institute. If you are forced to retire, find another job even if it doesn't pay as much. Put off collecting Social Security benefits for as long as you can.
If you can find a job with health benefits, it's even better. The average health-care tab for an early retiree before he is eligible for Medicare is up to $8,500 a year, according to AARP.
Maria Smith-Alvira
Elite Title, Inc.
http://www.elitetitleonline.com
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