Is It Time to Change Your Portfolio?

Is It Time to Change Your Portfolio?

Should you change your investment portfolio allocations? Maybe so – Probably not.

Have your reasons for investing changed?

Have your overall circumstances changed?

Have the financial problems you are trying to solve changed?

If the answers to these questions are no, beyond occasional rebalancing, you likely don’t need to change your portfolio. If the answers are yes, then indeed you should consider making adjustments.

The decision levers for potentially changing your portfolio have nothing to do with the economy, interest rates, taxes, politics, or forecasts from media pundits. All of these are outside your control.

Here’s the real issue. There are roughly 40 million people in the U.S. between 50-65 years of age. This is the cohort in the run-up to retirement. Regardless of their level of readiness, around 12,000 people head off into retirement every working day. The majority of the folks in this group are blissfully unaware of the prevailing financial condition that affects all retirees – the inflation virus.

Just because you don’t anticipate living cost increases in retirement doesn’t mean the inflation virus will leave you alone.


As the chart below shows, over a 30-year retirement, living costs can be expected to rise around 2.4 times based on historic inflation.  Purchasing power is cut almost in half over just 20 years. That’s a mighty big problem. The even larger problem is most people don’t realize the breadth and depth of purchasing power erosion until it’s too late.

With a hat tip to history, there’s a path out of the inflation swamp. Historically, ownership in the great companies in and outside the U.S. has provided long-term returns far in excess of underlying inflation. Owning stocks, (via mutual funds or ETF’s), is the most reliable, yet most misunderstood long-term strategy for sustaining your pre-retirement lifestyle.

Reliable because premium above inflation returns in the stock market are well documented by actual returns stretching back almost a century. Misunderstood because the emphasis by the financial media is almost entirely on the short-term, where returns can be very volatile.

In order to obtain above inflation investment returns, you need to actually be invested in the market for the long-term. You have to steer clear of the barbed-wire fence that represents short-term markets. You have to think and act long-term.


The process of setting target investment allocations is a combination of art – a realistic assessment of your ability to stay invested in different conditions, and science – how much risk you need to accomplish your goals. Once set, changes to your portfolio allocations should be made relatively infrequently.

Day-to-day distractions and noise pull you away from what you’re trying to accomplish. The markets reward patience and punish impatience. It’s simple, but hard. Start there. Ready for a real conversation?