Mike Giordano, CFP®

We’re closing in on the unofficial start to summer. The Memorial Day weekend is nearly upon us. Growing up in Pennsylvania, Memorial Day meant we were nearing the end of the school year. In the South, by Memorial Day, the school year has already wrapped for a week or two. That means, vacation season is already underway.  Time to check into the hotel and check out from life.

That may include your financial life, including your long-term plans. That’s a good thing. You need periods of decompression. No different than your work, if you’re always on, it’s easier to get burned out. If you’re always staring at your financial spreadsheets–your plans–you may get overwhelmed, experience unwanted stress.

So, before you head out on vacation this summer, check in on your plans. If you’ve got a big goal you’re hoping to achieve in coming years—retirement, a child’s education, a new home—check in to make sure your strategy still matches your risk tolerance and your timeline.

I’ve seen time and again, people start out with a prudent strategy only to see it go awry simply because they haven’t made adjustments as they near their goal. As I’ve written many times, a pilot flies differently at cruising altitude than when she’s about to land the plane. Same is true for you as the pilot of your financial airplane.Let’s use retirement as an example. The way you invested in your 30s or 40s may not be the way you should invest as you near the date of your work departure.

Today’s calm markets have given those nearing their goals a window of opportunity to make adjustments. But, that calm will not last forever. Volatility is a normal part of investing. Which means at any time, for any reason, markets can suffer sharp selloffs. The key to good planning is not being forced to sell investments or delay your desires simply because you didn’t adjust in time.

Remember, this guideline:

  • Any money you need in the next year or two, you want to protect from volatility. That translates to cash, money-market funds and short-term CDs.

  • For your goals 3-5 years out, focus on limited volatility through the use of diversified bonds.

  • Beyond 5 years, you have the ability to deploy more growth investments like stocks and real estate. You want the opportunity for returns that significantly outpace inflation and you have the time to weather near-term selloffs.

Most one-time goals are easier to plan. A new car in two years requires cash. A new home in three years may include a mix of bonds and cash.

But, planning for retirement in more complex. If you’re planning to retire tomorrow. You need some money in cash to fund the next couple years of spending. Then, bonds to cover the next 3 years. But, you will still likely need to work stocks into the mix to protect your purchasing power for the majority of your retirement. After all, today’s retirees may face a retirement that is significantly longer than their childhood.

A simple check in today may save you money tomorrow. But, even more importantly, it may save you the heartache from feeling forced to delay your dreams.


This material is provided as a courtesy and for educational purposes only.  Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation. 

 All views/opinions expressed in this newsletter are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC.