Let’s define the terms. “Portfolio” is all your assets that can grow and produce income. I’m looking for fat cows. I apologize to farmers and ask their indulgence as this city person talks metaphorically about cows.
By fat cows I mean a cow that gives milk which is the dividend or income and a cow that is not losing weight which means your assets are holding their value or growing.
Identify each of your retirement investments. They can only have a space in your portfolio if they are growing your money or producing income. You want both functions because you want to keep up with rising costs during retirement.
“Strong” is subjective but it suggests the cow is healthy and is strong enough for your purposes. What are your retirement purposes?
- You want to pay all your bills and expenses.
- You want to have something extra for those things that make you smile and expand your horizons (i.e. travel, family reunions, class reunions, a new hobby or business, etc.).
- You want the ability to withdraw up to $25,000 for an emergency without reducing the income you need for normal living expenses.
- You have created a strategy for covering the cost of long-term care that will not make the cow very, very skinny. Bringing care into your home might cost $25 an hour on average [Genworth Cost of Care Survey 2018]. If you needed twenty-four-hour care for six months, that might run about $109,000. Can your portfolio pay that? When you recover, will your portfolio recover too? Will that expense permanently reduce the portfolio? Are you aware of the other ways to pay for long-term care?
- When you review your assets at the end of each year, have your assets either grown or have not declined.
If your portfolio is a fat cow that can stay fat, then your portfolio is strong enough for your purposes.
It is easy to get caught up in analysis and forget the big picture. Fat cows are not the usual metric that financial planners use to discuss portfolios, but a vivid image can do a lot to keep us focused.
If you want help with working towards keeping your retirement portfolio strong, meaning keeping the cow fat and giving milk, give me a call. Dear Farmers, these are metaphoric cows. Much as I admire what you do, I can’t help with real cows. Sorry.
1 The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.
Penelope S. Tzougros, PhD, ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. 2019 Eric Hoffer Award Honoree, Your Home Sweet Home: How to Decide Whether You Should Stay or Move in Retirement. 2014-2020 Five Star Wealth Manager (Award based on 10 objective criteria associated with providing quality services to clients such as credential, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2014-2020 Five Star Wealth Managers.)
130 Turner Street, Bldg. 3, Suite 230, Waltham, MA 02453. Direct to Penelope 781 577 2311.
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