How To Manage Your Nest Egg in 2013

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Let us tell our short story about managing your nest egg in 2013.
There is more to this fundamental process than avoiding the fiscal cliff.

Prospective investors often ask “What should I be investing in the year ahead?”
Our answer is that the key is to first ascertain the financial objectives you’re trying to achieve.

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For us, investing has always been and continues to be a long-term journey.
Our initial probe is for you to tell us where you see the portfolio progress in 5 to 10 years.

These queries get your analysis off and running:

  • Is there a well-designed investment plan to get you there?
  • Have you had a recent retirement projection prepared?
  • What are your potential effects from a market decline?
  • Are the investment risks in line or higher than your comfort?

In our view, managing your nest egg is first about setting policies and strategies.
Then, and only then, about your investment selections.

KCM’s 2013 Core Tips:

Applying a little common sense helps ease the scope of your job.
We summarize our core portfolio beliefs for 2013:

  • Prospects: Revisit what is expected of the portfolio. Figure out which is more important: growing or preserving the nest egg or a balance of the two. It makes a difference on its design.
  • Mix: Decide on an acceptable asset mix and invest within it. Rebalancing is a good practice. Yes, sell some of the leading assets and purchase lagging ones as per the mix. Just stick to quality.
  • Diversify: Allocate the portfolio into suitable asset classes. Equities are exciting, but don’t exclude those boring bonds and cash instruments. Real estate is also a good fit for many.
  • Global: Own a piece of the entire rock. Sprinkle the nest egg all around the world. The biggest allocation is likely to Canada. Then think about other desirable geographies.
  • Profile: The investor profile should not change frequently. Neither in good, nor in bad markets. Some may find it more comforting to invest gradually, rather than all at once.
  • Sizzle: Skip the chase for those sizzling hot sectors. They often chill down rather quickly. Besides, too many investors miss the exits when time is ripe to make changes.

We do not obsess about which sectors may turn out to be portfolio leaders or laggards.
Rather, we pay close attention to total portfolio composition.

We assume that there will be some portfolio laggards.
This is also something many investors have to accept.

Our philosophy is to include as many sectors and geographies as possible.
It’s not foolproof, but it delivers more often than not.

Investors can’t control market directions.
They can control every portfolio strategy summarized above.

Manage your nest egg with an approach you control.
Just proceed with caution at all times.

That’s our story for 2013 and beyond.
I’m available for discussions.

Best of the holidays,

Adrian

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avatarAdrian Mastracci - KCM Wealth Management posted Wednesday, December 19th, 2012.

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