Modern investing: What do you hope to achieve?

morning, everyone!

Some of you may recognize my name, I served Lodi as a financial advisor for over 30 years and retired a bit over 2 years ago. I’m pleased to be joining the other local financial professionals you have had the opportunity to read in this space and hope to share information you will find helpful.

My, how our industry has changed. When I was starting in the investment business, our primary way of reaching new clients was to contact people with a good investment idea. It might be a stock our research department had identified as attractive or a new tax-free bond that had just become available for us to offer.

Now, very few financial advisors start with a product. Today, it’s more about what are you, the client, looking to achieve with your savings. Of course, most people seek out investments to help them work towards financial independence for their coming retirement. Many love their kids enough to work towards sending them to a great college. Grandparents are especially keen on helping those beautiful and so bright grandkids.

Our planning tools have evolved to allow very specific personalized plans to be assembled that consider where you are now and where you would like to be in your future. Of course, your feelings about risk are important, too.

Planners also help you considered all the open questions; questions you want asked to help make sure as little as possible is left to chance. And the planning can go well beyond the few basics listed above. I found in talking with people about investing that it is very helpful to have a starting reference as to what is available in this whole area.

The three areas investments fall into are: Cash, fixed, and equity.

Cash is where we have our reserves. Many people leave a cushion in their checking for this purpose. Some open a separate savings, some buy short-term CDs (certificates of deposit), some have a money market account, some have holdings with a credit union, and some buy short term treasuries from the government. Everyone is different in where they keep their reserve, but everyone that wants to be involved with investments has some monies in reserve.

How much reserve is right? Well, the answer varies with several factors. One of the primary factors is the nature of your job and the security of your continued employment. The greater the stability of your income, perhaps the greater your comfort with a bit less in reserve.

And then there is an emergency reserve, the amount you need to feel safe. This amount varies with each person’s experience and feelings. There is also the current education money, the vacation money, the money needed soon for taxes, any amounts needed for the next major purchase, the money that is planned for gifts to others or to the causes that are priorities. We want to think about all of these as we consider, “Is there enough in reserve?”

And you may want to consider some of those major unexpected expenses that you’ve experienced before, too. Like a new set of tires, repairing a fallen fence, or a blown water heater. How much do I really need to make sure that a sudden, major expense doesn’t knock such a big hole in my checking that it forces me to think about using credit or even to consider invading my investments?

Well, I’ve come to the end of my space for this first read. I’ll be talking next about fixed investments. So, until next time, I’ll see you around town! Have a great week.