Thoughts, ideas, suggestions and education from financial adviser Jim Ludwick, Founder of MainStreet Financial Planning, Inc. of Odenton, MD; Washington, DC; New York City, and Santa Barbara, CA

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Thursday, October 3, 2013

Market Timing or Recognition of Change in Timeline?

The US stock market high in mid September prompted a discussion with my partner Anna Sergunina the following day.  “So what does that mean to us? “, I asked as the topic came up.

“Nothing to me”, replied my younger partner.  “Well, I was just thinking my timeline to retirement is less than ten years.  Maybe it’s time for me to become a ‘pre-retiree’ and change my asset allocation to reflect that,” I remarked.

The next day I changed my early 2009 set asset allocation (90/10 stocks to bonds) to the more timeline and age appropriate 60/40.  Why? Was this market timing? No, it was a time horizon re-setting to a mix more reflective of my situation and prepares my investment portfolio for distributions in the not too distant future (think 8 or 9 years).

If you’ve known me as a client or colleague you probably know, or should know, I’m a big fan of Rick Ferri’s book, “All About Asset Allocation”.  It is my second most recommended book next to Charles Ellis’ “Winning the Losers Game”.  I routinely show clients the appropriate page from Rick’s book.  The one I’m now following is the Pre-Retiree asset allocation.  Thank you Rick.

The reason for financial planning is to have a roadmap and then follow that road map.  Eleven years ago I developed my own financial plan.  I submitted it to the National Association of Personal Financial Advisors (NAPFA) as part of the requirements to become a NAPFA member and demonstrate my proficiency in this field.  I didn’t have to submit my own plan but I figured any comments or suggestions by the reviewer would help me and my family is a great way. 

That plan, subject to a few comments by my reviewer and subsequent changes, is in effect today.  Every January 1st I review my progress and look over my plan elements.  I share it with Carol, my life partner of 40 years.  If she’s happy, I’m happy.  Note: We are happy.

Bottom line: Each of us needs to have a plan, review our plan, and adjust our plan as our goals or timelines change.  Please don’t join or remain in the “Woulda, Coulda, Shoulda Club”.  To again quote Nike, “Just do it”.


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