Lodestar

Lodestar is the new buzzword for the year. It recently appeared in an anonymous New York Times Op-Ed article: “We may no longer have Senator McCain. But we will always have his example — a lodestar for restoring honor to public life and our national dialogue.”[1]

What is a lodestar? According to Merriam-Webster it means “a star that leads or guides; especially: North Star.” It adds, “one that serves as an inspiration, model, or guide.”

Should you follow a lodestar? In the financial services industry there are two: an advisor and a financial plan.

According to Vanguard, working with an investment advisor can help you increase returns. They found an advisor relationship can add 3% in net returns.[2]  Beyond investments, an advisor can help you with several types of planning, including financial, education, tax, estate, charitable, and much more.

In another study, it was found individuals who complete a financial plan have three times the assets of those individuals who do little or no planning.[3] Your financial plan will quantify and prioritize your goals. It will also determine your asset allocation and investment selection.

Here are a few ideas to guide you towards your financial destination:

  • Work with an advisor, preferably one who holds the Certified Financial Planner Designation. A CFP® will design a plan that is personalized for you and your family.
  • Invest your assets according to the results in your plan by utilizing a globally diversified portfolio of low-cost mutual funds.
  • Rebalance your assets annually. This will keep your investment risk and asset allocation intact.
  • Meet with your advisor to discuss your plan, goals, and assets. How often? As often as you need.
  • Adjust and amend your plan as your wants and needs change.
  • Think long term. Since 1871, investors in the U.S. stock market have always made money over 20-year periods, according to The Motley Fool.[4]

A star, map, compass, sextant, and GPS have all been used to help explorers navigate their travels. Working with an advisor and completing a financial plan can increase your odds of success of reaching your goals as both will keep you focused during good times and bad. Your advisor will use all their tools and resources to help pilot you to your financial promise land.

And behold, the star that they had seen when it rose went before them until it came to rest over the place where the child was. ~ Matthew 2:9

9/7/2018

Bill Parrott is the President and CEO of Parrott Wealth Management firm located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. 

[1] https://www.nytimes.com/2018/09/05/opinion/trump-white-house-anonymous-resistance.html, Anonymous, 9/5/2018

[2] https://www.vanguard.com/pdf/ISGQVAA.pdf

[3] http://www.nber.org/papers/w17078

[4] https://www.fool.com/investing/2018/05/11/ask-a-fool-what-returns-should-i-expect-from-my-st.aspx, Matthew Frankel, May 11, 2018

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