Single Parent Advice:The classic business motto; grab the low hanging fruit. It might be sales leads, past business, or cutting overhead. You can always improve the bottom line.
Have You Found the Low Hanging Fruit in Your Financial Plan?
| Author: James Studinger | Posted: 09/13/09 | ||
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The classic business motto; grab the low hanging fruit. It might be sales leads, past business, or cutting overhead. You can always improve the bottom line.
So where is the low hanging fruit in your financial plan? Ahhh the sacred cow - it's been staring you in the face, nestled snug in your portfolio - your investment holdings.
O.K., but you are a buy and hold investor. Well that's something we have in common then. But let's not confuse being a long term investor with holding a loser long term.
It's very difficult to time short trends of the markets. Therefore many people take an asset allocation approach, and match their portfolio composition to a comfortable and relevant risk/return mix of various stock styles and bonds. And then hold that mix for a long time, no matter the markets short term gyrations.
That's investing for the long term. But along the way, stocks and other investments need your attention as they sometimes need to get the axe.
The past twelve months have given you invaluable information on the risks and opportunities your investments have in store. It is time to take that information and turn it into useful action.
Companies can go bankrupt and some investments might be a Ponzi Hoax. But aside from ultimate collapse, some do reach a point when it's time to walk away with gains, or start fresh with what you still have left.
There has been extreme volatility for more than a decade. During that time, many investments have certainly lost my favor. For various reasons, even when the market was staging a recovery, some investments struggled to keep pace.
Some investments get too heavily weighted in sectors, like technology or financial. Some get overly concentrated in specific countries. Sometimes their bets are right, but when they are wrong - watch out. And at that time, it does not behoove you to ignore what is broken, erroneously thinking it will eventually, automatically take you back to where you want to be.
So yes, investments can reach a point past optimization, and you might be best to move on.
I begin by looking at some of the fundamentals through sites like Yahoo Finance. The holdings reports and key statistics reports are like windows, with you peeking inside. I like to view the fundamentals before I look at their performance. I want today's facts prior to being intrigued with yesterday's performance. Or you can also go directly to a company website for further research.
If you do decide to cut and run, be sure to improve the quality. I've seen people want something different, but not really know what might have been broken in the first place. So they seek out a new investment, but unknowingly end up putting the money back into the same problem. That can be an expensive proposition, which financial education and experience will help to overcome.
So grab the low hanging fruit, but take a few minutes to make sure you're plucking the right ones. There is a comfortable science behind it, and the cost of not improving your financial position is staggering - measured in years of your life. Informed changes can have major positive impacts, but uninformed is leaving too much to chance. So when in doubt, please call or email me at james@jpstudinger.com with questions.
When balancing business and family, sometimes we can all afford a good quick fix.
James P. Studinger believes that every important journey must begin by plotting one’s course—and that an informed client is the best client. He is author of Wealth Is a Choice, his first book, and owner of the JPStudinger Group, a wealth-management company.
For personal consulting services, you can call the office directly at 248-643-6550 and ask to speak to “James.” He would be happy to answer your questions and/or set up a meeting upon request. You can also call the office to book him for a speaking engagement.
Securities and Investment Advisory Services offered through NFP Securities, Inc., a Broker/Dealer and Member FINRA/SIPC and a Federally Registered Investment Advisor NFP Securities, Inc., is not affiliated with JPStudinger Group
