Nesting Season

Have you seen the birds nesting?

Photo: Tom Koerner/USFS. Source: Flikr. CC-BY-2.0

This is the time of year for laying plans, gathering resources, and starting on projects. It’s a busy time, for people and for other creatures. We see birds gathering what they need to build their nests, safe places to lay their eggs and incubate them until they hatch. Ducks scope out bodies of water and shorelines, siting their nests in tall grasses or shrubs to provide cover. The female builds the nest using grass, reeds, and down to form a soft, warm pocket, and the drake brings food while she hatches the clutch. She soon leads her ducklings to water, and the cycle begins again.

Planning is integral to financial management: setting goals, establishing resources, allocating assets. Stocks provide appreciation, bonds deliver stability, and cash is a liquid resource available on the shortest notice. Financial planning for people looks a lot like nest-building in birds. It starts with identifying a goal – chicks, or buying a home, or college funds – then looking for resources to meet that goal. But knowing your goal is crucial.

The next step is figuring out what resources you have – income, expenses, assets, debt, sticks, mud, down. Assembling your resources is like mallards assembling their nest: put the pieces together in the right order in the right proportions. A portfolio for long-term appreciation uses mostly stocks; one for safety depends on bonds. And not all stocks are created equal. Some provide more income, some more safety, some more growth.

Illustration: George Rankin, 1910. Source: Archive.org

Then, execute your plan. Having a plan is important, sticking to your plan can be challenging. When friends boast about the money they can make day-trading, or house-flipping, or in some other financial excess, it can be hard to stay with what seems boring: budgeting, saving, and investing in a diversified portfolio. Every so often we should do a check up to make sure we’re on track. But unless we have a major life change, most plans should be pretty resilient.

Ducks and other birds need to build nests. It’s pre-programmed in their DNA. By contrast, there’s nothing that forces people to set goals and plan for our future needs. Nothing, that is, except the desire to be prepared. And to get our ducks in a row.

Photo: Lynn Greyling. Source: Public Domain Pictures.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2019-05-06T05:52:55-04:00May 6th, 2019|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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