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Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.

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Topic: Wealth Management

Wealth Management Planning: The best way to buy stocks profitably throughout your lifetime

wealth management planningAt the beginning of a new year—and one that’s already had a fair share of turbulence—getting back to the basics is the perfect way to put things in perspective. That’s why we’re bringing you a series of four special posts that examine major portfolio decisions every investor needs to make. We outline the pitfalls involved and the approach we advise in our wealth management planning.

This week: The basics of stock buying. We look at how to select stocks at each stage of your investing career in order to keep your portfolio growing steadily over the years

Each Tuesday for the next three weeks, we’ll look at another key step in wealth building from the point of view of our Successful Investor Wealth Management service.

Today: Build your stock portfolio to carry you comfortably into retirement.

During your working years, you put yourself on an investing regimen. Each year, you set aside a fixed sum to invest. It’s important to continue investing the same sum (or raise it) through good years and bad. The same sum buys more shares in “bad” years, when prices are low. It buys fewer shares in good years, when prices are high. This cuts your long-term average cost per share.

In retirement, you reverse the process. You sell enough stock every year to raise the cash you wish to extract from your portfolio. You may sell more stock in years when you feel prices are high. You should sell less when prices are low. But either way, you should aim to sell in a way that leaves you with a stronger portfolio that is better suited to your goals and temperaments.

Manage your portfolio successfully into retirement

You can feel comfortable when it comes to the financial side of you retirement… if you have clear, simple guidelines on planning your portfolio design. You can benefit from our experience in the day to day work we do building wealth for our Successful Investor Wealth Management clients. We’ve packed our experience into one comprehensive guide for you—“12 Steps to the Retirement You Want.”


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To practice the Successful Investor method, you need to get acquainted with a number of well-established stocks with a history of earnings and, in most cases, dividends. You choose your yearly purchases from this list, based on their fundamental appeal. You also take care to spread your money out across most if not all of the five main economic sectors: Manufacturing, Resources, Consumer, Finance and Utilities.

Some of your selections will seem particularly attractive in light of the value they offer, based on earnings and balance sheet information. Other selections will cost more in relation to these measures, but will make up for it with better growth potential. So, rather than aim for a value or growth focus in your portfolio, you’ll have some of each.

You also take care to downplay or avoid stocks that are in the broker/media limelight. Some stocks work their way into the limelight because they are profiting from an investment fad. Some get there through stock promotion.

Do your buying as early as possible during the New Year

Some stocks in the limelight are good businesses that deserve attention. But the limelight blows their appeal out of proportion. This builds up investor expectations for these stocks, often to unsustainable levels. Some limelight stocks live up to these heightened expectations, or even exceed them. But most limelight stocks eventually stumble. When the inevitable disappointments emerge, stock price downturns can be sudden and brutal. Some are permanent. That’s why these stocks should make up at most a modest part of your portfolio.

Note that you don’t need to spend time thinking about how much money to invest. You invest the same amount every year. Of course, you will occasionally raise or lower your yearly commitment for an indefinite period, because of changes in your income or expenses.

You also don’t spend time worrying about when to buy. You buy every year. It’s best to do your buying as early as possible in each New Year.

That’s how we invest for our wealth management clients, to the extent that this is possible for each client, in light of his or her temperament and circumstances. Instead of agonizing over how much to invest or when to buy, we invest each client’s funds as soon as they become available. Rather than depend on predictions, we focus on investment quality, and portfolio balance and diversification.

That’s where we can create the most value, so that’s where we spend most of our time and effort.

Next week: How to increase your long-term returns.

Note: This article was originally published in 2015 and has been updated.


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