I write often about the similarities between retirement planning and shooting sporting clays. The resemblance between the two are amazing, and Laura and I are blessed to be able to do both. One of the things that we have seen lately with new prospects is the level of risk they have in their portfolios. Do it yourself people are notoriously bad with this; they have high concentrations of risky stocks. Likewise, we see this in others whose advisors are not quite as risky as the do-it-yourself guy, but the risk is still higher than it needs to be. So, what does this mean? The higher the risk, the higher the potential for loss. Remember the events in 2008-09?
Laura and I recently made a large investment in shot shells. These were different, they had smaller shot size and traveled slower. Prior to buying these shells, we shot them at the pattern plate to see just how well they performed. We evaluated these shells the same way we evaluate our portfolios. The takeaway was these shells performed as good or better than the shells we were using before.
So here are the parallels to sporting clays shells and retirement planning. In both cases, it is important to be able to hit a moving target. By having smaller shot size, the pattern improved, it became denser, increasing the chance of hitting the target. The slower shells had much less felt recoil, we could shoot more without feeling the pain. Having riskier/faster funds means the pain you might feel in a market downturn will be greater. The slower shotshells are less expensive. The riskier/faster funds are more expensive.
But in the end, these shells did what they were supposed to do, they broke the target, over and over. Less is truly more!
If you have an interest in patterning your portfolio, give us a call.
Mike Mickels is President of CochranMickels Retirement Specialists and an avid sporting clay competitor. CochranMickels Retirement Specialists provides personalized planning and investment services to individuals approaching and in retirement. They also provide retirement and benefits training to Federal employees
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc, a Registered Investment Advisor. CochranMickels and Cambridge are not affiliated.