This past weekend my church participated in a serving project at a local elementary school. The school has a garden they use to teach their students about nature. It has vegetables, fruits, and a natural habitat with native Texas plants and trees.

When we arrived at the school it looked like the garden didn’t need any work. From a distance it appeared tidy. However, when we started inspecting it there were several weeds, buried walking stones, and overgrown brush. If we had not done a close inspection, we would’ve missed all the items that needed a little extra TLC. As a result, we put our gloves on and got to work.

On the surface, your investment portfolio may appear fine. It might look good from a distance, but how does it appear after a close inspection? Are there things in your portfolio that need to be pruned or added so that it performs well over time?

What items are lurking in your secret garden? Here are a few suggestions to help your portfolio sprout some new growth.

High Fees. When was the last time you had your fees audited? Do you own expensive mutual funds or insurance products that could be hindering your returns? How do you know if you’re paying high fees? If you’re not sure, talk to a Certified Financial Planner® who can help benchmark your fees to similar assets. A search of similar funds or products will give you an idea if your fees are high, low, or just right. If you do own investments with high fees, consider moving them to lower cost alternatives.

For example, the Quaker Strategic Growth Fund (QUAGX) has a front-end sales commission of 5.5% and annual expenses of 2.22%. It also has an annual turnover of 185%. It has a 10-year average annual return of 7.26%. By comparison, the Vanguard S&P 500 Index Fund (VFINX) does not have a sales commission and the annual expenses are .14%. The annual turnover for this fund is 3%. It has generated a 10-year average annual return of 11.92%, and it has outperformed the Quaker Fund by 4.66% per year. High fees will choke your portfolio of future growth.

Poor Asset Allocation. Your asset allocation will determine your portfolio’s long-term performance but if it’s inconsistent with your goals and risk tolerance, it must be changed. Your portfolio may carry too much, or not enough, risk and this will cause a problem at some point.

For example, if you were 100% invested in stocks in 2007, you lost 37% of your account balance in 2008. Likewise, if you were 100% invested in cash in 2009, you’ve missed a 340% move in the S&P 500.

Your asset allocation should reflect your goals, risk tolerance, and time horizon. If your risk tolerance is high, you’ll want to own growth-oriented assets such as stocks. If it’s low, you’ll own more conservative assets like bonds.

After your asset allocation is defined, establish an annual rebalancing for your portfolio to keep your risk profile intact. An annual rebalance is like a crop rotation.

No Financial Plan. Your plan will help prioritize and quantify your financial goals. It will guide your investment decisions over the short and long-term. More importantly, it will keep you grounded during all economic conditions. If you follow your plan, it will help you navigate the volatility in the stock market. It will also help you answer questions like: How much is enough? Your plan will be your most important tool to maximize your wealth. It will be the design of your financial garden.

As we launch into the fourth quarter of the year, use this time to review your holdings, asset allocation and financial plan. Dig deep into your portfolio and remove the weeds so your portfolio can generate fruit for years to come.

It is like a grain of mustard seed that a man took and sowed in his garden, and it grew and became a tree, and the birds of the air made nests in its branches.” ~ Luke 13:19


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.





Planting Seeds

Pastor Rick Warren of Saddleback Church recently wrote a devotional about reaping and sowing. His article focused on planting seeds and waiting for them to grow. He mentioned how people get irritated over the delay between the time a seed is planted and when it bears fruit.[1] Patience is a virtue.

In another post, he highlighted how one kernel planted does not equal one kernel grown, but it can yield 100 times the original amount. For example, one tomato plant can produce 200 tomatoes in a single season.[2]

At 2005 years old, General Sherman is one of the largest trees on the planet at close to 275 feet high and 103 feet in circumference.[3] It probably grew fast in some years, slow in others. It has lost a branch or two, but it’s still growing. It has survived rain, fire, wind, and snow. To my knowledge, no human hand has helped it grow. A single seed sprouted, and the rest is history – a long history!

Investing and gardening have many similarities. It requires patience and discipline to create generational wealth.  Most people start small by investing what they can, when they can. It’s better to invest today with a small amount of money rather than waiting to try to accumulate a large sum before putting your money to work, remember General Sherman started off as a tiny seed.

If you invested $100 per month in the Vanguard 500 Index fund from 1976 to 2018 your account balance would be worth $879,716 today.[4] The fund generated an average annual return of 10.93%. Despite the stellar growth, it experienced a few down years – seven to be exact. It had 12 years where it delivered returns between 1% and 10%. So, 45% of the time it made less than 10%. The patient person was rewarded for staying the course. The impatient one probably didn’t reap the benefits. In fact, the 15-year average annual return for the fund was 9.17%. The investor return was 7.94%.[5]

The buy and hold investor was rewarded by the gravitational pull of the markets and the constant drip of saving monthly.

If you’ve had the opportunity to plant several trees, bushes, or flowers, you know some will grow fast and others will grow slow. They’ll sprout and bloom throughout the year. This is true for investments, especially in a diversified portfolio. If you own several investments, you’ll experience different growth patterns. This year a few technology stocks are leading the market. In 2017 international investments outperformed US companies. In 2008 bonds outperformed stocks.  Investments, like plants, will grow on their own terms. However, if you stay committed to your entire portfolio over time it will bear fruit.

Plants take time to grow. There’s no such thing as instant maturity. No farmer goes out, plants the seed in the ground, comes back an hour later, digs it up, and expects it to have grown. You’ve just got to let it be. Leave it covered, and let God grow it in his time. ~ Rick Warren

July 24, 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://pastorrick.com/you-will-reap-your-harvest-in-just-the-right-time/?roi=echo7-33557633288-52999209-08bdf0f509462d040172c456356cf79e, July 19, 2018

[2] http://www.thejournal.ie/readme/giy-gardening-opinion-3864153-Feb2018/, Michael Kelly, 2/24/2018

[3] https://en.wikipedia.org/wiki/General_Sherman_(tree)

[4] Morningstar Office Hypothetical Tool, 8/31/1976 to 6/30/2018

[5] Morningstar Office Investor Returns

Spring Cleaning.

Snow is melting.  Flowers are blooming.  Grass is growing.   Robins are singing.  Spring has arrived.   With the arrival of spring it’s now time for a little spring cleaning.   After months of dark days and cold nights, open some windows and let the fresh air into your home.

When my family and I lived in Connecticut we loved the arrival of spring.  Once the snow melted we’d put our yard back together.   We’d walk around our yard picking up branches and tree limbs.  We’d clear flower beds and add layers of mulch.   On the inside, we’d open several windows and let the fresh spring air whip through our house and force the stale winter air out of our home.

Your investment portfolio may need some spring cleaning as well.   The arrival of spring also marks the end of the first quarter and hopefully you’re closer to achieving your financial goals.

Here a few spring cleaning tips for your investment portfolio review.

  • If you’re holding a losing investment, it may be time to sell it and move the money into a new idea.  Prune your portfolio as you prune your garden.
  • Do you need to trim some gains? If you have an investment worth more than 10%, 20% or 30% or more of your account, it’s time to take some gains.   It’s been said trees don’t grow to the sky.
  • Is it time to rebalance your portfolio? Rebalancing your account will help reduce your risk and keep your original asset allocation intact.   For example, in 2009 you started with a portfolio of 50% stocks and 50% bonds, today your mix is 70% stock and 30% bonds.   The stock market has soared since 2009 and, as a result, your stock and bond allocation is not aligned with your original goal.    A rebalance will fix this issue.
  • The spring is a great time to finish an outdoor project. Adding a deck, pool or barbeque to your home you may enhance the value.  Adding small, international or real estate companies to your account may give it a boost.
  • Do you need to update your will? Has your family grown?  Have you added new asset classes?  With the arrival of spring and the departure of tax season spend some time updating your will.
  • Create a financial plan. A well-constructed financial plan will help you with your annual spring cleaning.  Your financial plan will allow you to focus on your long-term goals with an occasional trim here and there.

Sitting on a deck under sunny skies is an excellent backdrop for the review of your portfolio.   A small change today can bear much fruit tomorrow.

For behold, the winter is past; the rain is over and gone. The flowers appear on the earth, the time of singing has come, and the voice of the turtledove is heard in our land. ~ Song of Solomon 2:11-12.

Bill Parrott is the President and CEO of Parrott Wealth Management, LLC.   For more information on financial planning and investment management please visit www.parrottwealth.com.

April 10, 2017