Ponder This

If you are getting closer to retirement, how much of your portfolio do you want in the Magnificent 7 stocks represented in the U.S. Growth Index, now projected by Vanguard to return 1-3% annualized over the next ten years (and yes, that is a nominal number, not inflation adjusted) . . .

. . . when you can lock up a 10-year Treasury Bond at 4.65%? Maybe the future returns of U.S. growth stocks will prove Vanguard wrong, generating annualized returns of 14.5% over the next decade, like it did the decade ending March 31, 2024.

What happens if Vanguard is spot-on with its forecast, or heaven forbid, overstating eventual returns over the next ten years?

Does your financial plan consider the possibility that this market dimension, discussed ad nauseum in the daily financial press, might produce annualized returns less than the negative -27.13% cumulative return from 1999-2008?

Ponder that question.

Building a “Coffeehouse Investor” portfolio allows you to ponder these questions and more. These are the questions that will impact your financial well-being as you construct a portfolio that hopefully plans for unexpected medical bills when you are 80 years old.  

Have you pondered and planned for that?

I write at length about constructing portfolios in chapter 4 of my first book. If you have been a longtime follower, you most likely have a diversified Coffeehouse Investor portfolio. However, these portfolios can become overweighted due to a lack of rebalancing and an unwillingness to manage the capital gains accumulating in your account.

Go back to your financial plan and address your tax management and estate planning issues. Understand your risk tolerance and build an allocation of stocks and bonds that will sustain you, regardless of Vanguard’s forecasts and life’s unknowns.

Common Sense Investing

If you’re looking for a second opinion or sound wisdom on investing for the long term, schedule a strategy call with me and learn how our common-sense investing approach and straightforward financial planning could benefit your life.