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Recalibrate for retirement success … Portfolio review pointers

As your partners in financial accountability and health, the team at O’Donnell, Ficenec, Wills & Ferdig encourage you to ramp up your portfolio review as the year winds down.


What’s “in” a portfolio review?


As with other elements of our personal, professional and financial lives, regular reviews, evaluations and metrics associated with respective plans and strategies are the vehicles for accelerating the management that lends itself well to results, performance and success.


As it relates to wealth and retirement savings management, ongoing assessments are foundational when building, recalibrating and sustaining constructive programs to reach our financial goals. They provide meaningful, insightful and substantive answers to the rather shortsighted and superficial question and tendency of simply looking at one’s statements and asking, “Am I ahead this month? Or, am I falling behind compared to last month?” This temptation is enough to make anyone’s heart race and can put you in a constant state of unnecessary stress.


After all, there are so many considerations beyond that personal “bottom line” or golden number that influence progress on this front, be it from personal “life-changers” (marriage, divorce, additions to the family) to broader economic fluctuations. You don’t even have to actively make changes to your portfolio mix for its contents to shift. We can be as hands-off about our portfolios as possible, not touch them at all, and still have some unexpected or surprising flux -- a reality that only further underlines the need to regularly “check up” on the health and, as needed, the “healing” and recovery of your collective investments. Resolve to make these new year’s financial behaviors stick!


We are generally reviewing for:


  • How our progress stacks up to reaching our goals

  • If results thus far are within our desirable risk tolerance or range

  • Outside of risk tolerance, if gains are being made within other parameters (i.e., tax requirements and cash flow constraints)

  • The need to alter strategies or tactics

  • Pinpointing potential mistakes or oversights

  • Accordingly, corrective actions that may need to be done sooner rather than later

  • The need to get ahead of and “course correct” before problems rear their ugly heads


As accountants and tax professionals, we at OFWF take a special and holistic interest in the intersection between one’s personal accounting and wealth-building and implications such as tax liabilities. Proactive and expansive insights and partnerships, based on trusted guidance and perspective, help to avoid the tendency to make emotional decisions based strictly on the “hard numbers” within shorter-sighted balance statements (see above). This truth harkens back to the temptation for investors to largely sell when the market tanks and then sit on their hands as the market comes back to life. They then miss out on the gains that are so frequently associated with historical economic and market rebounds.


Action steps


Those “in the know” have sometimes characterized the annual financial “gut check” as an inverted pyramid. At the top of the pyramid reside portfolio priorities. At the base of the pyramid, conversely, reside the least urgent tasks. Time horizon greatly dictates these portfolio-centric priorities as, if one runs out of runway, at least there is enough fuel in the tank for the most important considerations to take flight.


With that in mind, our first priority task generally involves determining where we are “at” on the path toward achieving goals.


  • Pro Tip No. 1: Assess how your overall balance and savings rate or percentage measures up in propelling your goals forward. Depending on what you find, it may be necessary to save at a higher rate each year to reach your retirement aims as well as any other competing objectives, such as contributions to a child’s college funds or down payment on a property or vehicle.


For our friends who are already in retirement, congratulations! A smart gauge when assessing one’s portfolio and progress is to pinpoint and adjust the rate with which you are actively withdrawing from your accounts.


No such evaluation would be complete without assessing for the “eggs” (types of investments) that are in your “basket” (portfolio).


  • Pro Tip No. 2: We all know the pitfalls of too many like eggs in the basket. However, this mix of stocks, bonds, mutual funds, and cash should not simply “sit on a shelf,” but rather evolve and flex based on progress, objectives, time horizon, and other risks unique to your situation.


Speaking of potential risk exposures, review for how “weighted” your portfolio is toward those stocks that are “buzzy,” or associated with keen growth.


  • Pro Tip No. 3: You do not want to be overly reliant on such growth-oriented names. This can leave your monies/nest egg overly exposed to risk and you may not have the tolerance or “road” to have such a reliance on these seemingly high-reward stocks. It also bears mentioning, especially in the current and persistent inflationary environment, to potentially spread or “balance” that risk with the likes of TIPS (Treasury Inflation Protected Securities).


Taxes are an undeniable and inevitable consideration.


  • Pro Tip No. 4: Our tax professionals encourage you to take a deeper dive into how much you may be contributing to varied tax-privileged investment vehicles; i.e., 401 (k)s and IRAs. Since these limits for contributions, required minimum distributions, and other provisions can vary by factors such as age, it is important to ensure you are not missing out on any opportunities or leaving yourself vulnerable to penalties and other costly, strategic oversights associated with advantageous account types.


Last, but most definitely not least, take action with great care. Tread lightly. But don’t be paralyzed by analysis.


  • Pro Tip No. 5: Here again, it is helpful if not essential to onboard members of your personal advisory board, like the professionals at OFWF. Our team members have the considerable depth and breadth of expertise to help to put various considerations and elements of the financial health check-up checklist into perspective. We provide a timeless, trusted resource to drown out the potential “noise” regarding economic and legislative changes. In turn, we demystify and clear the clouds that contribute to a hazy investment outlook.


Let’s get to the heart of what really matters and is legitimately important to you and your future self, thus avoiding getting too caught up in the weeds or feeding into the emotionally-charged investment chatter that may not have any relevance to you in the first place.

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