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VOL. 128 | NO. 241 | Wednesday, December 11, 2013

Dana and Ray Brandon

Don’t Lose Your Investment Balance

By Ray and Dana Brandon

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Ray’s Take What’s the right portfolio balance for you? There are no stock answers (no pun intended). The makeup of your personal stock, bond and investment portfolio balance is as individual as your fingerprints. It depends on your age, the number of kids you have, your fixed and discretionary costs, your income, risk tolerance, your health, your spending habits, and much more – not to mention your specific financial goals.

However, people often just follow the general rule of thumb – accepting riskier investments when they are young and gradually moving to more conservative ones as they age. There’s nothing inherently wrong with that approach, but it ignores a lot of the nuances that impact each household.

Determining your investment balance is the key to reaching your goals. If putting together a financial plan and determining what your balance of investments should be is a daunting task, consult with a financial adviser. It’s too important to “wing.”

Even after you have developed an investment portfolio balance that suits your particular needs and goals, you’ll still have to make changes along the way. These variations will not only reflect changes in your current situation and age but will also be influenced by fluctuations in the capital markets. You’ll need to occasionally make changes in order to maintain your investment plan balance. But don’t overreact. If you’re reallocating more than once or twice a year you’re probably doing more harm than good.

Financial planning is a balancing act all around: balancing the diversity of your investments, balancing savings against current financial needs, and balancing short-term and long-term goals. When you keep everything in balance, your investment balance sheet should continue to grow.

Dana’s Take Emotional balance is just as important when it comes to money matters. We all have complicated relationships with money, reaching back to our childhoods. The way we see money today – whether as a symbol of freedom, something to worry about, or a sign of materialism – has a lot to do with how we save and spend it.

Changing the emotional responses you have to money isn’t easy. However, if you are at least aware of when your emotions come into play, it can help to make financial decisions less about your feelings and more about your actual needs.

It’s not good to be the proverbial grasshopper, who has a great time spending everything but then faces financial ruin. Neither is it good to be the ant, who saves every cent but fails to enjoy life. The optimum position lies somewhere in between. Find the spot that balances your lifestyle and your hopes for the future, and money becomes a tool for you to use instead of something that rules you.

Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at raybrandon@brandonplanning.com.

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