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The Ultimate Financial Plan: Balancing Your Money and Life by Tim Maurer, Jim Stovall

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CHAPTER 9

The Gift of Clarity

INVESTING AND PORTFOLIO MANAGEMENT

Most of the information you read, hear, or watch pertaining to investing is either too simplistic or too complicated to be effectively implemented in your investment strategy. If you attempt to react to the minute details of each bit of market or economic news hitting the CNBC ticker, you’ll likely first, go crazy, and second, struggle to maintain any consistency in your investing. Conversely, the buy-and-hold strategy is entirely too simplistic. From the day the market peaked on September 7, 1929, it would have taken until 1954 just to break even if you bought and held. That is a pretty long time to wait, especially if you were planning to retire in 1932. Although some seem to treat it as such, the market is not a benevolent spiritual force that promises to grow our money as long as we’re willing to invest it over a long stretch of time.

Some very well-intended and gifted financial educators have attempted to minimize portfolio management to a newsletter, book, or chapter and have oversimplified it in doing so. Many who followed their advice saw their portfolios—made up of only a handful of prominent large-cap growth mutual funds—sawn nearly in half, twice, in the decade ending in 2009. You will not find an all-encompassing investing how-to in the following pages. It is, instead, our design to pull back the veil on the industry norms and invite you into further exploration.

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