Portfolio Performance – What is your MAGIC number?
Yesterday I was speaking to a gentleman that I have recently met about financial planning (I will call him Bob). He is on the cusp of retirement and needed a few things clarified before he hits the employment “toodleloo” button.
He has done well for himself financially over the years and he will likely have a fabulous retirement. There is one major flaw that I pointed out to him that could quite seriously alter his future financial dreams. The REQUIRED performance of his investment portfolio versus REALITY is disconnected.
Part of financial planning is making calculated projections about the growth potential of investments. This number is one of the most important variables in the equation to keep on top of. After all, a person’s investment portfolio is the likely to be the main source of retirement income. Bob’s portfolio wasn’t structured any where near being able to reach his required performance to meet his goals.
Sally (not her real name), will have plenty of money for her retirement with lots left over for her heirs. But, this could all disappear if she is either being too aggressive with her investments (risk of large losses) or too conservative (lack of growth). Keeping pace and track of what she really requires will be her best bet to accomplish it all.