This fall our family took a long-term guest into our home. As one of the by-products, my wife and I spent a lot of time cleaning house.
What we found was illuminating: lots of precious treasures turned out to be nothing but junk. Even the local thrift store wouldn’t take it. We thought some of it had value, but when you looked closely, it was really worse than useless.
In the same way, investors ought to examine their long-term financial plans regularly. Are your earnings and expenses still in line? Can you afford to set aside a little more? Have things changed—like a kid being born, or someone finishing college?
Major life changes require adjustments to your financial plans. Whether it’s saving more or changing the mix of stocks and bonds, your life-circumstances will determine your ideal portfolio. That’s strategy. Getting to that allocation from where you are now – that’s tactics. And when an old approach no longer fits, you should throw it out like an old pair of shoes.
There’s a saying that if you don’t know where you’re going, any road will take you there. By updating your plans you can assure yourself of a smoother journey, and a cleaner attic.
Douglas R. Tengdin, CFA
Chief Investment Officer
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