Perspectives

Ask Stuart Ritter, CFP Part 3

Jill Broussard

Bond funds aren’t returning very much these days, what do I do to make a better return on money for short term savings (rather than leave it in my savings account? 

It’s important to focus on your goal, not about a number for the number’s sake.

Kenya Onyango

At 35 years old what should my portfolio look like. I was told I’m too stock heavy. 

How you invest has nothing to do with how old you are.  It has everything to do with the time horizon of your GOAL.  The mix of stocks, bonds, and short-term investments in your portfolio is driven by your goal’s time horizon.  That mix gives you a balance between short-term stability and long-term potential growth (which you need to keep up with price increases over the long term).  With a long time horizon, we believe you should focus on growth since you likely have several years to work with the inevitable short-term volatility.  With your long time horizon of retirement, we believe you should be 90%-100% stocks. Remember that investing in stocks is subject to market risk.

Danny Bouton

What would be a good strategy to protect my portfolio enface of the fiscal cliff? 50% stocks 30% bonds 10% gold 10% cash now?   

Why just the fiscal cliff?  Aren’t there other things to worry about as well? Europe?  Gas prices?  Natural disaster?  Terrorist attack?  We don’t know the future.  Two options:  Guess, assume one outcome – pursue that outcome.  Admit you don’t know and invest for uncertainty.  Stick with the fundamentals.  What about after the fiscal cliff?  What if we don’t go over?  What if we do – are you sure you know what will happen (remember when people were sure there would be financial disaster in the U.S. if we were ever downgraded?)  Invest based on your goal’s time horizon and your risk tolerance – otherwise you’re like a pinball – bouncing from one headline to another with no long-term strategy.

Matthew Brown

Is over funding a whole life policy in your 30s or 40s a good strategy? 

Can I use a hammer to put a screw into the wall?  The answer is, yes, but I’m asking the wrong question.  The question isn’t could I use the hammer to do it, the right question to ask is, “What’s the best way to put the screw into the wall?”  Asking that leads you to ask other clarifying questions – like, “What kind of screw?”  And that process leads you to a much better solution to your problem.  So . . . what are you trying to accomplish (Saving for retirement?  A house down payment?  Pay off debt?  Kid’s college?) – and then ask what the best way to accomplish that goal is.

Tagged as: