Tweaking Your Portfolio for Life’s Curveballs

 George Jameson, CFP with Capital Wealth Group, breaks down when and why you might need to adjust your portfolio. From life changes to large stock positions and retirement goals, learn how small tweaks can keep your investments on track and aligned with your financial journey. 

 Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.

Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.

This is for education only.It is not tax, legal, or investment advice. Before  acting on any information consult your tax, legal, or investment advisor.

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Capital Wealth Group is a Fee-Only Advisory Firm located in Columbia, SC , serving clients locally in South Carolina and North Carolina and virtually nationwide.

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Transcript

  📍  📍  📍 Welcome to your Retirement Guide.  📍 I'm George Jameson, certified financial planner and founder of Capital Wealth Group in Columbia, South Carolina. Today we're talking about something that comes up a lot in client reviews. When should you actually change your asset allocation?

Every client I meet is unique and rarely does anyone fit neatly into a cookie cutter allocation.

 📍 Think of it like a road trip. You start with your GPS and an estimated arrival time. You make a bunch of planned and unplanned stops Along the way, you may run into traffic detours or even unexpected weather.

So even if you and your next door neighbor take the same trip, it starts and ends at the same place. Each one will be different,  📍 and sometimes you have to adjust your route to stay on track. Your portfolio works the same way life throws us curve balls and a few small tweaks along the way can keep you moving towards your goals.

So let's talk about situations where you might want to make some changes to your investments.

 📍 Number one. Making sure you have enough cash. One of the most common reasons to adjust your portfolio is cash flow, especially when you're getting close or entering into retirement.

Those first couple years after leaving work, your spending can change. Maybe you're traveling more, finishing home projects,  📍 helping out family, and so on. If this is you, a practical approach is to keep one to two years of living expenses in cash or highly liquid investments, and maybe five more years in quality bonds or fixed income for stability.

The rest stays invested for long-term growth. This way, if a curve ball comes up like a large unexpected expense or a market  📍 drop, you're not forced to sell investments at the wrong time.

So let's move on to number two, short or medium term goals. Not all of your financial goals are decades away. Maybe you're buying a new home, a new car, funding a child's education, or planning a big trip or even a wedding.

 📍 If you need the money in three years or less, definitely want to stay conservative such as cash, short term bonds or CDs may make sense.

For money that you don't need until about five years. Investments, like intermediate term bond funds may make sense, or even a balanced fund.

And if it's 10 years or longer, you definitely want to think about putting some or all of it in stock investments or ETFs or stock funds. The idea is simple. Match the timing of your  📍 investments to the timing of your goals. .

That way, life's detours don't force you into unnecessary risk and selling risky assets at the wrong time.

 📍 Now, on to number three, managing large stock positions. Having a large position in one stock, even if it's your employer stock, can be very risky. Even strong companies have rough stretches that last years or even decades.

While we often hear about the winners we missed. Plenty of individual stocks  📍 never fully recover. Some high profile examples include Enron in 2001, WorldCom in 2002 Lehman Brothers in 2008 Washington Mutual in 2008, Eastman Kodak in 2012, and many others.  📍 Even companies that are still around lost huge portions of their market value. Think GE, Cisco, Intel, Citigroup ATT, BellSouth, and so on. Anyone who invested in these companies in the late 1990s and even some in the early two thousands likely saw significant losses.

There are countless other examples where individual stocks lagged the overall market for years.

 📍 So a good rule of thumb if you do own individual stocks is try not to let any single stock, including your employers, exceed 10% of your portfolio. To manage risk. Make sure other investments aren't doubling down on the same stocks. Diversifying across different sectors may make sense and adjust your overall stock allocation if needed.

Small course corrections now can prevent major setbacks later.

 📍 Now let's move on to number four, different ages and different strategies. If you and your spouse are more than several years apart in age, your portfolios might need to look different. 📍 

The younger spouse can handle a bit more growth while the older spouse may need stability. If you combine your assets, think about blending allocations based on each person's own personal timeline.

Of course, you want to also include their risk tolerance and risk capacity and need for cash. That way you're both prepared for life's twist and turns.

 📍 Now let's move on to number five, planning for a long life. So good health and family longevity are blessings, but they also mean your money may need to last longer.

 📍 If you expect to live into your nineties or beyond, there may be room for a little more equity exposure. Some planners even suggest gradually increasing stock exposure in retirement. It's called a reverse glide path. And this can help offset inflation and longevity risk. It's like adjusting your speed on a long road trip, pacing yourself

ensure as you reach the destination safely, and no matter how long your journey takes.

 📍 Now let's move on to number six, adjusting for health concerns.  📍 On the flip side, serious health issues may call for a more conservative approach. You may want enough liquidity to cover medical cost and to enjoy your time comfortably.

If leaving a financial legacy is important, that's great, but don't hesitate to use your assets to enhance your quality of life. Your portfolio should support your journey, not hold you back.

 📍 Now, let's move on to number seven. When you're worried about running out, if your savings aren't where you'd hoped  📍 the instinct might be to take bigger risks.

But a smaller portfolio can't absorb big losses, focus on controlling spending and protecting what you have. I know it's not for everyone, but for some conservative retirees, an immediate or deferred annuity can create a guaranteed income stream

reducing pressure on your portfolio. Adjustments in your portfolio, like taking a safer route when the road ahead looks uncertain, may make sense. 📍 

Now let's move on to number eight. Steady income changes the game.  📍 Having a pension and social security provides a reliable income stream, which can cover all your daily living expenses.

This allows your other investments to focus on growth and inflation protection. Because you have that foundation of income, you can adjust other parts of your portfolio to better suit your goals, even if life throws unexpected changes.

However, it doesn't mean you have to change your allocation in this situation, but it's just an idea.

Now some closing thoughts.  📍 So when should you change your asset allocation? The short answer is  📍 when your life changes.

Your allocation  📍 isn't something you set and forget. It's also something that you shouldn't use to try to time the stock market. It should evolve with your lifestyle, health goals and income needs. Model portfolios and age-based mixes are great starting points, but your situation is unique and will usually require small adjustments now and later in retirement.

A few thoughtful tweaks can make your plan more efficient, reduce unnecessary risk, and help you stay on track towards your goals.

Thanks for  📍 joining me on Your Retirement Guide show. I'm George Jameson, certified financial planner and founder Capital Wealth Group in Columbus, South Carolina. If you found this helpful, share it  📍 with someone who's thinking about retirement or adjusting their portfolio.

If you're looking for a one-time retirement plan or ongoing wealth management, schedule a free consultation from my website at www.capitalwealthgroupsc.com. And remember, the best portfolios aren't built for average investors. They're built for you.

Have a great day and stay tuned for next week's show.