One of the things a first time boater quickly learns is that most of the time their boat is off course. Constantly changing factors like wind, current, depth, and waves are always threatening to push or pull the boat in unintended directions. Unlike your car, which has brakes, a boat doesn’t! So, for a novice boater, it’s somewhat unnerving to realize that a boat at rest… simply doesn’t stay still!
I often think of retirement planning and investing as very similar to boating. There are many factors to consider when you take responsibility for steering your portfolio towards the ultimate goal of retirement. You portfolio is constantly subject to being thrown off course by the choice and allocation of investments, the direction of the economy and markets, and lack of time or expertise in monitoring and adjusting the portfolio. Life, like the ocean, is constantly changing. Similar to a boat on the water, a retirement plan or investment portfolio at rest simply doesn’t stay in the same place! Your life, health, goals and investments should be monitored periodically. As these things change, you may need to modify your financial plan and portfolio to stay on course.
My first experience as a boat owner was frustrating, if not downright terrible. I had problems launching, driving, maintaining and especially, docking it. Lack of defining my needs led me to buy the type of boat that wasn’t what I really wanted. The mistakes I made were expensive and took away from my enjoyment. To top it all off, about six weeks after buying it, the boat sunk at the dock following a hurricane!
Like my experience in boating, don’t jump into saving for retirement without planning carefully. Here are four tips on keeping your retirement plan and portfolio afloat:
- Have an ultimate destination and map for getting to retirement. You may have to adjust the course, but making small changes is easier than being totally off course;
- Know the investments that make up your portfolio and why they are there. Just like knowing the parts of your boat, you want to make sure your portfolio has the investments it needs to operate effectively.
- Make adjustments as the economy, markets and your situation changes. The portfolio you create today will change as the conditions around you change and also as you get closer to retirement.
- Consider hiring a captain. Hiring a professional who will help chart your course, monitor and keep things on track, make appropriate investments, and adjust the portfolio as conditions change is important if you don’t have the time or desire to take the ultimate responsibility yourself.
Although my first boating experience was terrible, it made me a smarter boater. The next year, I purchased a smaller boat and learned from some local experts about important boating issues. I learned how to launch it correctly, maintain it, fix small problems that came up, and use experts to do the hard stuff that I didn’t know how to do. The result was a better, less stressful and more enjoyable experience. After I gained experience, I traded up to a slightly larger boat and had many wonderful trips on the water with my family.
Most of the same lessons that are key to good boating can be applied to having good financial planning and investing experiences:
- Keep your retirement portfolio on track by charting a destination;
- Navigate it through good times and bad, and;
- Stay on course by increasing your knowledge and utilizing experts when needed.
You own your retirement (eg. you own the boat!). Cruising through retirement can be fun and enjoyable, but to have the best experience still requires you to take on the responsibility of being a good captain or hiring one to navigate your own personal retirement plan.
Whether or not you are a current client, if you have any questions please feel free to contact me and I would be happy to see if I can answer your questions; or schedule some time to talk using our online appointment calendar.