Be Like A Bank. Test Yourself To See How Your Finances Would Hold Up If Something Bad Happened

Jill Cornfield@JILL_CORNFIELD

Is it crazy to compare yourself to a large financial institution?

No. You both have a key thing in common: assets.

The only real difference is that many more people depend on a big bank than on you.

One Wall Street winner — Jamie Dimon, CEO of J.P. Morgan Chase — emerged from the financial crisis whole. Some of the bank’s investors more than tripled their money in the wake of the financial crisis. Dimon’s strategy: preparing for the worst, not simply hoping things will turn out OK. The bank performs dozens of regular stress tests on a range of scenarios, including wars and recessions.

When you think about it, you already do that. What if you got sick? That’s why you have health insurance. What if something happened to your car? That’s why you have theft and liability insurance.cl

Do your own financial stress test by creating a financial plan — that’s the foundation of your review. So if you don’t have one, put that on your to-do list. Don’tbe intimidated. A financial plan doesn’t have to be complicated.

Then, as the banks do, test different parts of your financial life to see how they’d perform in bad weather.

Annually check these four key things recommended by Andrew Crowell, vice chairman of D.A. Davidson & Co. Wealth Management.

You want to do this to identify any vulnerable points. Crowell recommends testing your portfolio and general finances, and how…

Read on…article continues HERE on CNBC website

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