Moving season and your retirement

“I find the great thing in this world is not so much where we stand, as in what direction we are moving: To reach the port of heaven, we must sail sometimes with the wind and sometimes against it – but we must sail, and not drift, nor lie at anchor.”

–Oliver Wendell Holmes, Sr.

Over the next few weeks some good friends of mine are moving. July and August are the big moving months, at least as far as Jerusalem goes, as parents want to get settled in their new neighborhoods and have their kids ready for September 1 and the start of the new school year. Almost every day you see moving trucks either emptying out or moving into apartments. Aside from my good friends leaving, earlier in the week as I was on my way into the office I saw another good friend who told me that he wants to buy an apartment and is leaving the neighborhood.

All of this moving made me a bit nostalgic as it was almost exactly 9 years ago that we bought an apartment and moved. Thinking back to that time I remember what everyone else who has ever made a big move can attest to. As we prepared to move we went through shelf by shelf and drawer by drawer and realized just how much garbage we managed to accumulate over the years. Never-used wedding presents that were so bizarre they couldn’t even be re-gifted, numerous beginning to count and read books (ever notice they all use farm animals), t-shirts vintage 1990 from running a “Starbucks 8k Run for the Beach” back in Seattle, suits that were in good condition but about 6 sizes to small that I kept in just in case I get back to my senior year of high school weight and so forth – you get the picture.

Believe it or not the moving home process is quite similar to investing.

JUST A MESS

A few weeks ago I met with someone who inherited a portfolio from his mother. He was in his late 50’s and starting to plan for retirement. He was looking to be much less aggressive and more focused on generating income. In the portfolio were some of the usual suspects like AT&T (T) and shares of all the spin-offs that were known as the “Baby Bells,” some of which have gone bankrupt. There were some once high flying industrial stocks like General Electric (GE) which lost about 80% of its value, since it’s peak over 20 years ago. While reviewing the portfolio it was like a trip down memory lane of every hot sector on Wall Street over the last 40 years.

Many years ago, well-known investment manager Rick Ferri wrote: “Ask experienced advisers how many portfolios they’ve reviewed that lack philosophy, strategy, and discipline and you’ll make them laugh. That’s because almost all portfolios lack these elements. Investors say they’ve got them, or think they have them, but their portfolios don’t show it. They hold a smorgasbord of randomly collected investments that have no relationship to each other except that they all tend to be popular ideas from days gone by. An experienced eye will spot this trail of trends reaching back many years and can estimate each one’s purchase date. When I review a portfolio, I’ll often say something like: “I bet you bought this emerging market fund around the summer of 2007 and that commodity fund in early 2008.” I’m right most of the time. How do I know? That’s when other undisciplined investors were buying the same funds!” I know the quote would seem to be outdated but history repeats itself over and over again.

CLEAN UP

I can’t stress enough the importance of getting your portfolio current. I don’t mean making the same mistakes of yesteryear and buying what’s hot today, that’s not getting current. Rather, investors need to sit down and figure out what their financial goals and needs are, and then create a portfolio that will help get you there. For retirees looking for supplemental income, a portfolio of some wind power and meme stocks probably doesn’t make sense. So called dividend champions – companies that have raised their dividend consecutively over decades – like a Clorox (CLX) or Proctor and

Gamble (PG) for example, may be more appropriate. I’m not recommending these stocks, just using them as examples, and past performance is no indication of future results. Be sure to do your own research before buying any investment. Maybe a globally balanced portfolio is more suitable for you depending on your goals.

The point is that in order for your money to work for you in an efficient manner, you need to take the time to get rid of the junk, understand the purpose of the portfolio and then use a disciplined strategy that suits your own specific financial profile.

The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.

Aaron Katsman is the author of

Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.