“Winterizing” your Portfolio

fall colorsFall is upon us in the Midwest. One only need take a look outside to see the signs of the autumnal equinox all around them. The leaves are turning bright shades of yellow and orange and the air is fresh and crisp. As financial planners there is another way we know that fall is here – It is perhaps one of the busiest times of our calendar year.

We find that many people use the changing of the seasons as a signal to do a careful review of their financial status. And with good reason – evaluating your plan now is a great way to ensure that you are ready for the end of the year and the start of 2014. Here are six questions you should discuss with your financial adviser to ensure that your portfolio is in tip-top shape this fall – consider it a winterizing kit for your investments:

  1. What actions do I need to take before the end of the year? While a lot of financial questions can wait until the New Year begins, for tax purposes, there are some crucial things you must consider before the ball drops in Times Square.  Do you have taxable gains this year that you should consider offsetting with realized losses?  Is your portfolio prepared for any upcoming legislative changes in 2014? Are there things you need to shift based on your age, retirement plans or upcoming financial goals in 2014? Now is the time to talk to your financial adviser and ensure that you are prepared.
  2. What is the performance of my current investments relative to similar options? Gauging performance on returns alone will not always give you the best picture of your portfolio’s strength. But, if you look at your portfolio relative to how the market has performed, it can give you a better picture of where you stand. Again, this is where a financial adviser can steer you in the right direction (preferably one who is not being paid based on commissions for product sold.)
  3. Am I taking the appropriate amount of risk in my portfolio? Finding the right balance of risk in your investments requires a certain amount of finesse. It is important that you are neither too aggressive nor too conservative. A portfolio that is too aggressive can result in significant loss, while one that is too conservative might mean that you are not keeping your investments in line with the current inflation levels (also resulting in loss or at the very least minimal gain).
  4. Are you saving enough? For most people the goal in having a strong portfolio is to ensure that they can live out their retirement in a comfortable fashion. With that in mind, the amount of money you save can have drastic impact on whether or not your dreams become a reality.  Some people take the wait and see approach…making a savings plan and then waiting several years to see if it worked out. However, it is better to continually reevaluate your plan and make little tweaks as you move forward.
  5. Can I sustain my current withdrawal rate? This question is only really applicable if you are already retired and drawing on your portfolio to support your lifestyle, but it is a question that retirees often ignore. While the fear of running out of money in retirement is a very real thing, many people simply ignore the amount of money they are drawing from their portfolio. The rule of thumb is generally 4% however, it is important to remember that this might not be appropriate for everyone.  New products have come onto the scene that allow you to guarantee your income for life no matter what happens in the markets that can be a good fit for investors wishing to know they can’t outlive their income.
  6. What other changes should be made? As with life, there are always twists and turns in investment planning. This is why it is crucial to work with a financial adviser you trust – a person who will not tell you things just because they think it is what you want to hear (or it will help them to make a few extra bucks), but rather a person who will give you honest advice that will help you to accomplish your goals both short and long-term.

In the end, the beauty of fall and a well planned portfolio are in perfect harmony with one another.  They both give us peace-of-mind as we head into the next season of life.  And, if we prepare well in the fall, we will be better equipped to weather any upcoming storms.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s