Keep Your Eyes On The Prize

"Wealth and portfolio management is not about shooting the lights out. It is about slow, methodical and well thought-out planning to reach long-term goals" (twitter: @jstomenson)

Survey says:

Have you ever had a Financial Plan or Wealth Forecast prepared for you?

Clearly our readers who responded to our survey (if you have not, you still may, just click on the link, 10 quick questions), have been paying a little bit of attention, congratulations!

We cannot have a strategy for investing if we do not have a plan that focuses on our goals (most of us apparently know this). However, for the 10% and any others you all might know to pass on this valuable information, beware the investment advisor who wants to plow you in to a "cookie-cutter" type portfolio without first preparing a detailed, written plan (with charts and graphs and cash flow numbers, etc.). 

Further, make sure that they have the credentials to be preparing a plan (like High Rock's Certified Financial Planning, CFP, professional). The Plan (we call it a Wealth Forecast at High Rock), needs to be regularly monitored, reviewed and updated and the strategy (asset allocation) adjusted should it be required (portfolio re-balancing at a minimum).

The journey will be fraught with the noise from many levels of sales and media bombardment, sometimes raising the question of "am I doing the right thing?".  Sellers of a "better opportunity" (at that particular moment in time) will make it difficult to stick to the original plan. Some call it the "shiny object syndrome": distracted by something apparently new and better.

Just like an airline trip to your favourite destination, your journey may encounter turbulence along the way, but pilots are well trained to handle it (only 1 in 11 million airline passengers may not survive the worst outcome). Once you arrive, the turbulence is long forgotten. Make sure that the financial professionals you are working with are as well trained (with the appropriate accreditation, licensing, ethics) as those pilots (unfortunately the statistics on "abused" investors are not as good as they are for safe flying). For us too though, it is getting you to the destination that is ultimately the most important.

It is easy to be frightened by the geo-political landscape, by the short-term economic outlook and the impact of volatility on your net worth, especially if you are close to or in retirement when you are more dependent on your portfolio for income.

But even the most recently retired have likely at least 20 years plus to go. That is probably at least two recessions and two recoveries (or more) to cycle through. Everything economic cycles. It has before, it will again.

Some of us will find opportunity in these cycles, some will choose to ride them out. Active management, passive management or a combination of both will all have their time to shine. 

Regardless, stick to your plan and keep your eyes on the prize.