How life events could change your investment strategy

Do you have a solid investment strategy in place? Or are you in the “ready to buckle down and start saving” camp?

Whatever your situation may be, the impact of a major life event may force you to revisit and adjust your investment tactics. Here are some common situations and smart ways to respond:

You start a new job.

Maybe you’ve accepted your first full-time position, earned a raise or made a bold career change. Congratulations! A new job is the perfect opportunity to establish or re-evaluate your retirement plan.

To save the 70 to 80 percent of your current income that you’ll need in retirement, the experts at U.S. News recommend putting at least 10 percent of each paycheck into a retirement fund. Check with your employer to see if they offer a matching program, like a 401(k)*. If so, try to contribute whatever they will match – otherwise, you’re giving up free money.

If your retirement account changes when you switch jobs, make sure to talk with an investment advisor who can walk you through your options and avoid unwanted taxes and penalties.

You get married.

When you say “I do,” you’re also getting hitched to your spouse’s debt and spending habits. It’s important that you are honest and discuss finances with each other as soon as possible. Start by communicating your goals and matching your investments to those plans. Review your overall portfolio together to avoid overlap.

Trying to save for a down payment on a house? Consider investments like CDs or bonds, which are safer than playing the stock market. On the other hand, for investments that require long-term savings – college education for your kids or retirement – you definitely want to mix stocks and other riskier investments into your portfolio, since you stand to make greater gains and have time to recover from down cycles.

You’re having a baby.

In a 2008 study, the U.S. Department of Agriculture found middle-class families will spend about $225,000 for food, shelter and other necessities in the first 17 years of a child’s life. That’s a lot of money. It’s no wonder many new parents cut back on their savings and investment planning.

“New parents should seek to balance their short-term needs with long-term goals,” Forbes contributor David Randall writes. “If one parent is contributing to a 401(k)* account and is eligible for a matching contribution from an employer, then he or she should put away at least enough to receive this free money.”

It’s also a good idea to start investing in your child’s college education as soon as possible. Whether it’s through a traditional savings account, a 529 savings plan or putting a small amount of money away when your child is born, saving now will go a long way towards the future.

A loved one has a medical issue.

Dealing with unexpected or long-term medical issues can be emotionally and financially draining. There are two non-taxable, penalty-free options to pay for out-of-pocket healthcare costs:

A health savings account, which is available to Americans enrolled in a high-deductible health plan.

A flexible spending account, which is available to those enrolled in an employer healthcare plan.

“If your level of medical care requires you to tap into your assets, you should draw from non-retirement accounts like emergency funds or savings accounts first,” Laura Ahl, chief operations officer and operations manager for Northwest Investment Management, says. “You want to protect your retirement savings as much as possible.”

Although it’s common for one spouse to manage investments, it’s crucial that both partners know what is going on in case the other is unable to make the appropriate decisions.


Are you ready to re-evaluate your investment strategy? Click here or call Northwest Investment Management at 1-877-300-3454 to make an appointment with an advisor today.

*Investments: Not FDIC Insured. Not Bank Guaranteed. May Lose Value. Not a Bank Deposit. Not Insured by Any Government Agency.