You can make yourself crazy checking your portfolio daily, says Jill Schlesinger. Instead, check your 401(k) quarterly - but retool your asset allocation. Here's how.
Jill Schlesinger: You seem very comfortable you’ve seen all relaxed.
Female: We just came from a party.
Jill Schlesinger: Can you spend 30 seconds with me? No! Busy no one wants free
Why you want to know the topic? It’s an easy topic.
Female: What’s the topic?
Jill Schlesinger: Money.
Jill Schlesinger: Do you like that? I’m Jill.
These stone lines guard the New York Public Library. In the 1930s the
Mayor of New York named them patience and fortitude, qualities he
thought people needed to weather the financial depression. Let’s go find
someone who needs financial advice.
Fred what’s on your mind, what can I help you with today?
Fred: Well let’s see. My 401(k).
Jill Schlesinger: Oh the old 401(k) questions so what’s going on how have you been
doing the last few years?
Fred: I would think like everybody else I’m down pretty substantial. I’m
probably down about 45% to 50%.
Jill Schlesinger: Ouch.
Fred: It hurts.
Jill Schlesinger: Do you, how often do you look at it?
Fred: Probably too much. I probably look at it almost every other day.
Jill Schlesinger: What? Do you actually change anything?
Fred: No, ones in a blue moon I do, on the stock side of it but that’s probably
about it. You know I’m probably better not looking at it at all and just
letting it grow.
Jill Schlesinger: Alright so let’s do a first thing is you don’t have to look at it
everyday that’s like a little bit overkill. The second thing is how about
getting a game plan together. Is the plan at like a fidelity or vanguard what
firm is it with do you know?
Fred: Latinberg –.
Jill Schlesinger: Okay, there’s a whole bunch of choices within there, the plan but
do you have more stocks than bonds. You know which reallocation is.
Fred: Yeah that’s probably the problem because I’m probably I’m a little bit of a
risk taker because I figure I’m still in my 30s so I can be a little bit of a
risk taker. Unfortunately last couple of years it was not that good to be
60% stock that’s where I am at 60% stock.
Jill Schlesinger: I don’t think 60 is so bad but here’s what I’ll give you some
advice. Let’s talk about like what you need to do to like retool your
allocation. Number one is you get to take your risk assessment
questionnaire its either on the website of the provider or you can go
anywhere online and it sort of says your risky here’s what your allocation
Now I also want you to downgrade your risk a tiny bit because you know
your 30, you’re healthy.
Fred: I’m 38 actually.
Jill Schlesinger: 38 he’s getting a little old and you know what if you don’t get paid
that much to take risk so its okay to actually put an allocation in place and
then say let me move it along. Okay now step 2 got your allocation and
your risk tolerance now once a quarter your in sales so you’ll be able to do
this easily. You know in the quarter ends right.
Fred: Sure, of course.
Jill Schlesinger: Right so ones a quarter do you sit down with your allocation and
that’s when you look at the statement or that’s when you go online and
you make an adjustment you rebalance you say hey the stock market is up.
I’m no longer 60/40 I’m 65/35 take 5% from your stocks, pop it into the
bonds and you know what you’re going to be forcing yourself to do, you’ll
be selling high and buying low.
Fred: Pretty small right.
Jill Schlesinger: Now so I think don’t look at it more than quarterly the most I
would say is monthly but other than that you’re really going to drive
yourself crazy and then if you have a game plan every single time you sit
down to look at it you’ll feel more confident that I don’t need to look at it
all the time. Does that make sense?
Fred: Well yeah it does now. I wish I had that sense after long ago.
Jill Schlesinger: But you know what it’s a whole new ball game we’re almost at
1100 in the Dowe for all I know you got a chance now to reallocate the
markets up so hopefully you get there and I want to thank you so much.
Fred: You’re very welcome thank you very much for your time.
Jill Schlesinger: Great take care, bye-bye.
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