In the fall of 2008, we published a list of important Do’s and Don’ts in an Oakland Press supplement. We felt it would be beneficial to our new readers and remind our past readers of those key things that can make all the difference in the world to their financial future. We’ve also added a few updates to the list.

- Do make a concerted effort to manage your money. You’ve spent the majority of
your life working to accumulate money. It’s important to learn how to manage your money yourself and/or get professional help. Make sure you are getting good advice.

- Don’t make basic financial mistakes such as:
(1) not establishing an emergency fund. Everyone should have at least three to six months of fixed and variable expenses in a cash-equivalent account that earns a competitive interest rate. And, with the extreme swings we’ve seen in the last few years, we now believe it may make sense to have 6 to 12 months of cash set aside to meet fixed and variable expenses instead of just 3 to 6 months.
(2) running up credit card debt. Pay off all credit card balances each month. If you can’t eliminate your credit card debt, you’re obviously spending more than you’re making. Review your budget and eliminate all discretionary expenses.
(3) not having adequate insurance coverage. Make sure you have adequate auto, homeowner’s, medical, life and disability insurance. Consider long-term care insurance and an umbrella liability policy.

- Do diversify your portfolio
True diversification requires owning 8-10 broad asset classes that provide low- correlated returns. Owning several mutual funds that have similar holdings provides little diversification. True diversification can increase returns while at the same time, lowering risk. Consider including the following asset classes:

- Cash or cash equivalents
- Short-term bonds
- TIPS (Treasury Inflation Protected Securities)
- Intermediate to long-term bonds
- High-yield bonds
- International bonds
- Large domestic stocks
- Small domestic stocks
- International stocks
- Real estate investment trust (REIT) funds
- Commodity funds

Make sure you rebalance your portfolio at least annually, buy selling over-allocated asset classes and buying under-allocated asset classes. Stay disciplined and avoid letting your emotions drive your investment decisions.

- Don’t ignore investment expenses and taxes
Many investors have no idea what they are paying, either directly or indirectly, for the management of their investments. Mutual fund management fees, advisory fees, transaction costs and taxes can significantly eat away at portfolio returns. Make a concerted effort to understand what you’re paying and reduce it to the absolute minimum. Pay attention to the tax efficiency of the funds you invest in. Taxes can eat up a high percentage of your returns.

- Do take time to plan for retirement
A successful retirement requires adequate savings as well as psychological preparation. Will your money last through your life expectancy? What will you do in retirement? How will your self-worth be impacted? Careful planning can make a world of difference.

- Don’t ignore basic estate planning
Don’t let an unexpected death leave you or your survivors scrambling to put their financial life back together. Make sure your financial records are in order and take the time have the basic estate planning documents prepared.

- Don’t rush into buying an annuity
While everyone is worried about their money lasting through retirement, annuities can be complex products and often carry hefty fees. Annuity sales personnel make big commissions off of annuity sales. Some types of annuities can be appropriate for retirees. Nevertheless, you need to educate yourself about all aspects of annuities before making a purchase. We recommend you seek the unbiased advice of a financial professional who is not in the business of selling annuities.