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January 30, 2017 | Four Year-Round Serious Money Moves

Adrian Mastracci

Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA. My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.

Much thought should always be devoted to managing “serious” money portfolios. Also referred to as retirement portfolios.
Investors have enjoyed a bull market since March 2009 without long corrections. However, many gurus think direction is ripe for change.

Hordes of daily predictions are making the rounds. They run the gambit from substantial pullbacks to slowdowns, sideways steps and more upside.
So, should investors be concerned? Is it time to jump ship?

Perhaps, run and hide? Reality is that nobody really knows.
The right answer should be “no”. Unless the nest egg is truly in tatters.

A well-designed portfolio ought to ease jitters and concerns most times.
Warren Buffett’s wisdom is invaluable.

These smart moves improve “serious” money portfolios year-round:

1.. Clear the clutter

Portfolios are typically loaded up with too many mutual funds. Worse yet, the collections of funds don’t always fit well together. Hardly anyone takes a close look at how the portfolio clutter got out of control. Most typically get bloated over the years with new additions.

A frequent portfolio theme for investors is to own a slew of 15 to 25 different fund names, sometimes more. Practically all purchased with deferred sales charges that start around 6% during the first year. Management expense ratios (MERs) for many equity funds exceed 2.5% when all fees and expenses are included. None of these MERs are deductible.

Many funds have a significant overlap of securities. Individual holdings within funds owned are often the same, or quite similar, providing a false sense of diversification. Such portfolios are in need of much polish to bring back their shine. Take a firm grip of the nest egg and untangle the portfolio muddle. Stick to simple things that work well. Owning around a dozen funds should suffice most cases.

2.. Ease the worries

A raft of investors love to worry, practically non-stop. Oddly enough, even during bull markets. Many investors have developed the “data dependency” affliction. That is, always searching for another piece of data to become the guiding light for investing.

Today’s wall of worry bellwethers have that familiar ring. Interest rates, deficits, jobs, trade figures …….. just for starters. Extra patience comes in handy to weather the unpredictable, bumpy patches. Maintain perspective. If it does not feel right, consider taking something off the table.

Have complete confidence in the chosen strategies before tackling the investment selections. There will be plenty of temptations for second guesses along the road. Being informed is smart thinking. Worrying about something that can’t be controlled adds needlessly to investment frustrations.

3.. Splash on quality

I’m reminded of the phrase “quality is job one” from a Ford campaign of long ago. Serious money portfolios also benefit from owning a healthy splash of quality. It’s wise to stick with quality picks, particularly for the core selections. Make sure the portfolio foundations are fortified with quality. Both for the stock and bond mix.

It’s far too easy to trade in quality for the lure of higher yields. The last few years have been brutal on bond returns, so it’s completely understandable. Just not always wise. Quality is a best friend of prudent long-term investors. Also recall the phrase from children’s books that reads something like “slow and steady wins the race”. It too is pertinent to the nest egg.

4.. Get on base

In baseball, it’s helpful to get on base frequently rather than always aiming for home runs. The same applies to serious portfolios. If some excitement must be part of the portfolio, carve out a small portion. Something that won’t hurt much if it crumbles. Hitting investment home runs is exciting. Trying to achieve consistent returns on a few hot selections is a low percentage strategy.

Strikeouts can inflict serious portfolio damage, often for a long time. So, limit exposures to single stock investments to sensible accumulations. Particularly, if the company is also the employer. Individual stock levels above 4% raise the caution flags. Also refrain from loading up on the must have sizzling bandwagons of the day.

Adopt these four serious money moves anytime, all year-round.
Each one delivers portfolio value throughout the investing journey.

Questions and comments are appreciated.


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January 30th, 2017

Posted In: Adrian Mastracci Blog

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