Financial Pulse Check

At least once a quarter, Ron and I review our investments with our financial advisor. We’ve been working with the same professional for over 15 years, and have a great relationship. Our most recent call took place yesterday.

(Please be aware that the following information is part professional opinion of our financial advisor, and part decisions based on our personal financial situation. In no way should this be considered expert advice on which to base your own financial decisions.)

Our portfolio is split between diversified stock funds, bonds, and cash. Last year’s decline in the stock market certainly affected us adversely – but as our financial advisor says, “It’s not a loss until it’s realized”. As long as the money stays invested for now, there is an opportunity to recover the value. Fortunately, during this volatile period we have had cash available, so have been able to leave our stock funds untouched. The market has improved 8 to 9% since the beginning of the year, but we were warned to expect a pullback in September or October (at least before the holidays), from profit-taking selloffs in the fledgling Bull Market.

Since retirement has actually begun for us, the specific distribution of our investments is pretty conservative. Our tolerance for risk is fairly low, since we no longer have an income to replenish losses. But we hope to be retired for a long time (the rest of our lives), so still need to be invested in stocks to get the type of returns required to fund our retirement. Every investor needs to determine their own tolerance for risk. High risk stock funds can generate anything from high reward to significant loss, and this sort of gamble is not for us at this point in our lives.

One decision we did make is to refinance the mortgage on our condo. Originally, we planned to pay the mortgage off early in 2010 when our ARM (Adjustable Rate Mortgage) resets to a new rate. But we can get a 15-year fixed-rate mortgage at 4.75%, and if we invest the money with which we would have paid off the note, we should get better than a 4.75% return on it. Our bank, UBS, will charge no points and no origination fee, so the fees (title search and appraisal) will be minimal and worth it in the long run.

We always feel more confident after a pulse check with our financial advisor. He provides expert advice and perspective, and gives us a chance to ask questions and discuss our ideas and concerns.