How Landscaping Can Make You a Better Investor
Summer is finally here! The rain has stopped and the plants are in bloom.
If your yard looks anything like mine, it's time to trim the bushes – they are out of control! They kind of remind me of some investment portfolios I've seen recently.
It makes me think that managing your investment portfolio is a lot like managing the landscaping around your house.
We've all seen the houses with overgrown bushes. Someone needs to get in there and regain some control.
The same goes for your investment portfolio. Some of your positions have probably grown like crazy. The result is that your current investment allocation may no longer resemble your original allocation .
This is a problem. In fact, it is a problem that could derail your retirement dreams .
But the solution is simple.
All you need to do is take a metaphorical hedge trimmer to your investments; just like you would your overgrown bushes. By taking this action you can pare back those overgrown positions and begin to "re-balance" your portfolio. With a little time and attention and some pruning here and there, you should be able put your investment portfolio back in line with your goals in no time.
Another problem you might encounter with your landscaping is the opposite of overgrown bushes. You may have plants or bushes that didn't do well over the winter. They will be struggling and need some extra attention.
The way we solve this problem is by adding some extra nutrients. A little fertilizer may be just what the doctor ordered to get those plants and bushes healthy, vibrant, and flourishing again.
The same goes for your investment portfolio. If you have a diversified portfolio, some of your investments will be in areas that have not performed well. These investments will have gone down rather than up and this will leave you with less in those areas than you intended.
This is another problem. Once again, your investment portfolio has come unlinked from your goals.
But once again, the solution is simple. Remember those dollars you trimmed from your overgrown investments? All we need to do is add them into these stunted investments just like fertilizer for your bushes.
By taking this action, not only will you be able to put your investments back in line with your goals, you will also be selling high and buying low. And isn't that what every investor wants to do?
One last step you should take...
Before putting away your gardening tools, take a step back and reevaluate the general look and feel of your landscaping.
Take some time. Consider what you've created. Are you happy with it? Is it giving you the colors and shapes you wanted? Is it attracting the birds you enjoy listening to? Are you getting the shade and sound protection you hoped?
If not, it could be time to make some changes so your landscaping can please you more and serve you better.
The same goes for your investment portfolio. Every once in a while, you should step back and reevaluate things. Ask yourself some questions such as: Will you be able to retire when you want with the income you need ? Will you be able to do the things on your bucket list once you stop working? Have any of your goals changed?
And most importantly, does your investment portfolio need to change so you can achieve your goals?
These are important questions. I hope you take the time to consider them. Because even though landscaping and retirement planning have some things in common, there is one big difference.
Bad landscaping is easy to identify. You can't miss it driving in your car at 40 miles an hour.
But an investment portfolio that no linger aligns with your retirement goals is a much subtle problem. It can easily go unnoticed for many years. Maybe until it's too late to correct.
So once the tools are put away, the yard looks great and you're ready for a cool drink, go in the house and take a look at your investment portfolio. If you spend half as much time managing your investments as you do your landscaping, I have no doubt you will be well on your way to maintaining an investment portfolio that can fuel your retirement dreams.