Construction Project

My neighborhood is in the middle of an enormous construction project. It’s chaos. Dump trucks and bulldozers are moving massive amounts of dirt to expand our roads and intersections to handle more traffic. A new retail shopping center and access road are also under construction. Commuters are challenged with lane closures, lane shifts, and traffic jams.

Our neighborhood is cluttered with barricades and orange pylons. It doesn’t look good. It may be this way for another year or two, but when it’s finished, it will look amazing.

Projects of this size require years of planning, vision, persistence, and grit. Developing a financial plan and building an investment portfolio also requires imagination and perseverance.  Initially, your plan is a dream, and it will only take shape after you commit your goals to paper. The foundation for a successful investment experience is a financial plan. Your plan is your blueprint. Can you imagine construction workers working without a plan? I can’t.

A plan can take years, sometimes decades, to see it come to fruition. It’s challenging to plan for a retirement that’s more than 45 years away. Likewise, retirees might find it hard to rely on investments to generate a steady stream of lifetime income.

The construction projects succeed because electricians, plumbers, and masons have different specialties. Similarly, a successful investment portfolio requires investments scattered around the globe. Large, small, and international stocks deliver long-term growth. Bonds provide income and safety. Cash offers liquidity.

A general contractor coordinates and oversees the project and workers to keep it moving forward. A Certified Financial Planner® is your general contractor. He guides your steps to keep you focused on your goals and make appropriate adjustments.

Regular maintenance on buildings, lights, and sprinklers will keep the area looking good and functioning correctly for generations.  Your portfolio will also need regular maintenance to weather market and economic cycles. Rebalancing your portfolio will keep your asset allocation and risk tolerance in check. Your financial plan needs reviewing annually to keep you focused on your goals. A monthly savings program should help your account grow.

A good plan doesn’t matter if you don’t implement it and follow the instructions. It’s imperative to put your plan into action so you can enjoy the fruits of your labor.

“Plans are worthless. Planning is essential.” ~ Dwight D. Eisenhower 

September 9, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management 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 so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

 

 

 

 

Measure Twice, Cut Once.

I love DIY projects.

This past weekend I was going to fix my garage door. I researched the issue, watched a few YouTube videos and talked to some professionals. I felt confident I could fix it, so I ordered the supplies.

The project was going well until I started to add the new part. It wasn’t working. I reviewed the instructions, but no luck. Frustrated, I gave up after an hour and went back to the drawing board. After my review, I figured out that the part I had ordered was 1/16th of an inch too big, so I ordered another replacement part. When it arrived, I completed the project in less than ten minutes. A friend of mine once told me with the right tools you can fix anything. He was right.

The primary tool for an investor is the financial plan. It will give you a blueprint on how best to construct, or fix, your financial life. There isn’t a good plan or a bad plan, there’s only your plan. It will give you a picture of your current financial situation. How does it look? Are you on track to reach your financial goals? Do you need to make any adjustments? Will your fix be a tweak or a major overhaul?

Like a construction project, a financial plan can appear daunting. Here are a few suggestions to help you get started.

Take an inventory of your financial assets. Where are they located? Do you own stocks, bonds or mutual funds? Do you have a 401(k) or company retirement plan? If so, gather all your statements and put them in an investment folder.

Gather your important documents like tax returns, insurance policies, and Social Security statements. Put these items in your important documents folder.

Identify your income. In addition to your job, do you generate income from other sources? Royalties? Rental Income? Pension? Print your paystubs, W-2s and 1099s and put them in your income folder.

Create a budget or spending plan. Where is your money going? The best way to create a budget is to review your past six months of bank and credit card statements. Write down your expenses and then create categories like housing, shopping, groceries, entertainment, and so on. Once you’ve gathered this data, put it in your budget folder.

Do you have debt? Do you have a mortgage? Car loan? Student loan? Credit card debt? Print out all your statements that identify your debt levels, payments, balances and interest rates. After this is done, put your statements in a debt obligations folder.

Establish your goals. Do you want to travel the world? Buy a second home? Volunteer? Retire early? Start a new business? Leave a bequest? Write them down, all of them. Dream big. Once this is done put your list in a goals folder.

List your concerns. Are you worried about your finances? Are you concerned about running out of money? Market losses? Dying early? Living too long? After you write down your concerns and fears, put them in your concerns folder.

Once your exercise is complete you should have several folders identifying your assets, goals, and concerns. You now have the foundation for your financial plan. Schedule a meeting with your advisor or planner to hand over all your folders. They will review the data and build your plan. Simple.

You now have a financial plan to help guide you toward achieving your goals. I know you can do it!

Hammer away!

Real men don’t use instructions, son. Besides, this is just a manufacturer’s opinion on how to put this together. ~ Tim Allen

May 29, 2019

Bill Parrott, CFP®, CKA® is the President and CEO of Parrott Wealth Management 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 so our clients can pursue a life of purpose.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation.