Not My Priority
SOME YEARS AGO, I had a health scare���and it taught me an important lesson about my relationship with money. My primary care physician wanted me to see a hematologist. ���Your white blood cells have been trending lower for the last five years,��� he opined. ���We need to find out what���s causing it.���
After a number of tests, the hematologist thought I might have a rare blood disease. He said the test results were inconclusive, but I fit the profile. He wanted to confirm his suspicions by performing a bone marrow biopsy. He went on to say that there was no cure for the disease, but there were drugs that could extend a patient���s life.
The doctor���s comments shook me to the core. Suddenly, I faced the possibility that my time on earth might run out far sooner than I expected. I started thinking about the things in my life that are important to me. How do I protect, experience and enjoy them? The following were the first things I did after leaving the doctor���s office that day:
I reviewed the beneficiaries on my retirement accounts to make sure the people who are important to me would be taken care of.
I reviewed my trust to confirm it reflected my current wishes on how my estate would be distributed to family, friends and charitable organizations.
I verified that the powers of attorney for my finances and health care were in order. I wanted someone who could oversee my affairs if I became incapacitated.
I checked my passport to make sure it hadn���t expired. I wanted to visit many countries and landmarks that I hadn���t yet had a chance to experience.
Looking back, I realized the things that were most important in my life during this stressful time���besides my health���were my family, friends and life experiences. What I didn���t care about: buying a new car or how my investment portfolio was performing. Before the health scare, tracking the stock market and my investments were an everyday ritual. I now realized those shouldn���t be my life���s main focus.
Want to spend less time thinking about money? Here are nine investment pointers that may help you fret less about your portfolio���so you can focus on the more important things in life:
Invest in broad-based index funds. You can sleep well at night knowing you���ll never underperform the market. Your portfolio���s return will be tied not to a fund manager���s investment selection, but directly to the stock market���s actual performance.
Buy those broad-based index funds through a target-date fund or a balanced fund. You���ll suffer less volatility during periods of extreme market swings.
Another way of weathering volatility: diversify. Allocate part of your money to bonds, certificates of deposit, stable value funds and high-yield money market accounts.
Hire a fee-based financial advisor to manage your investment portfolio. You���ll not only get investment advice, but also emotional support during turbulent times.
Avoid owning too much of one company���s shares. Limit your exposure to any individual stock to 5% of your stock market portfolio.
Remember that investing for retirement is a long journey. Wealth is built over decades. Bear markets and economic downturns are part of the process. Don���t focus on what���s happening day to day in the market.
Rebalance your portfolio periodically to maintain your desired weighting of each asset class.
Create a written plan listing your investment goals and strategies. During periods of market volatility, this can be a useful reminder of what you settled on in calmer times.
Most important: Don���t look too frequently at your investment portfolio. You���ll be less tempted to make changes���and you���ll experience less emotional stress.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Power of Two,��California Dreamin’��and Wrong Approach.
��Follow Dennis on Twitter��@DMFrie.
HumbleDollar makes money in three ways: We accept�� donations, ��run advertisements served up by Google AdSense and participate in�� Amazon ‘s Associates Program, an affiliate marketing program. If you click on this site’s Amazon links and purchase books or other merchandise, you don’t pay anything extra, but we make a little money.
The post Not My Priority appeared first on HumbleDollar.
