Consider These Mid-year Money Moves

A mid-year financial review can be a great time to stop and assess your financial progress.  Are you on track for your savings and investing goals year to date?  Are you making the most of your discretionary income while paying down liabilities?  Are you on a sustainable path toward the pursuit of your long-term financial goals?  Rather than allow time to slip by, a mid-year financial review can help you identify any time-sensitive course-correcting that may be needed.

Make the most of your cash

With interest rates continuing to creep higher with each Federal Reserve rate hike, it is no longer acceptable to be earning low rates of interest on your cash.  In fact, according to, there are many direct banks with rates greater than 4.25 percent.

When it comes to investing cash, remember, boring is good.  After all, cash reserves are not supposed to be exciting.  Instead, a true cash reserve is generally going to be liquid, contain no risk and maintain FDIC insurance coverage.  Savings accounts, CDs and online savings or direct banks are all popular options, and shopping around online can help you uncover institutions offering higher rates.  Interestingly, the banking industry is one where size and scale does not necessarily equate to better rates, so consider visiting to determine which banks offer the most attractive rates.

Rebalance your portfolio after the recent rally

If you are like many investors, it has been a while since you last reviewed and rebalanced your portfolio, and any time the markets make any major moves it can be a good time to examine the merits of rebalancing.   With many markets in positive territory year to date and significant rebounds in certain sectors like technology, a mid-year portfolio review can be an important tool.  In general, rebalancing may prove effective in helping to manage risk. Doing so may aid in bringing the various investments in your portfolio into proper alignment.  It is important to remember that as the markets fluctuate over time, the original investment mix you were targeting can change and alter the amount of risk in the portfolio. For example, if you were targeting a 60 percent stock and 40 percent bond portfolio and haven’t rebalanced in a few years, your mix may have over 70 percent in stock today.  Unfortunately, many investors fail to properly rebalance over time. There are many approaches to rebalancing, from rebalancing annually or semi-annually, to reallocating when any piece of the portfolio deviates from the target by 5 percent or more.

When determining your rebalancing strategy, be careful to review transaction fees and taxes. Keep in mind that capital gains or losses will be realized in non-retirement accounts, so speak to your tax advisor prior to making any adjustments. Remember, investing involves risk and rebalancing does not prevent investment losses. Instead, it is a means to keeping your portfolio balanced between the various asset classes selected.

Pay off high interest debt

From mortgage rates and home equity lines of credit (HELOC) to auto loans and credit cards, interest rates have gone up significantly in the last year and a half.  In fact, according to, the average credit card interest rate is now a whopping 20.68 percent.  Consider searching on for a list of low interest or 0 percent interest balance transfers on credit cards and consider a debt elimination plan.  When structuring a plan to eliminate debt it is often best to target the highest rate debt first.  Remember, paying off a liability that is charging you 20.68 percent is the equivalent of earning that return on your money.


Prepare for a possible economic slowdown

While some economic indicators point to resilient economy and the possibility of avoiding recession, other data suggests that things may head in the opposite direction.  One commonly cited predictor of recession is the yield curve, which inverts when short-term interest rates are higher than long-term interest rates.  (For example, a 3-month Treasury bill pays more than a 10-year Treasury bond).  This recession signal has been flashing for some time.  The problem with recessions is that are not easy to forecast.  In fact, data suggests that most economists have difficulty predicting future recessions because early warnings like inverted yield curves or ISM data aren’t always effective.  For example, an inverted yield curve has limitations as historical data suggests that a recession may occur anywhere between 1 month and two years of when the inversion took place – not exactly a precise indicator.  While no one has a crystal ball to predict future slowdowns, it is better to prepare for the unexpected.  From emergency lines of credit for individuals and businesses to building higher reserves for emergencies and eliminating unnecessary financial spending/waste, there are many approaches to building a recession-ready financial plan.  Now may be an important time for this approach.

Financial planning truly is a balance between living for today and planning for tomorrow.  Monitoring your progress through regular check-points throughout the year (on your own or with a professional) can help as you pursue your goals.  Since everyone’s situation consider speaking to your financial adviser to determine the most appropriate approach for you.

Kurt J. Rossi, MBA, CFP, AIF is a CERTIFIED FINANCIAL PLANNER & Wealth Advisor.  He can be reached for questions at 732-280-7550, and  LPL Financial Member FINRA/SIPC.