What’s in Your Investment Portfolio?

April is Tax time, and with it, a great opportunity to think more about your finances, and in particular, your financial goals and investment portfolio.

Here is an example that might help you with planning your own portfolio:


Michael and Janice are a couple in their early thirties. They don’t have any children, nor do they plan on having any. While they’ve started saving and investing for retirement, they haven’t made a lot of progress to date. They currently invest 3% each in their respective 401(k)s. Their employers match contributions at 50 cents on the dollar, up to 6%. The Stuarts also have a few thousand dollars in savings bonds that Michael got from his grandmother. They make over $150,000 a year combined and have minimal debt.

They do, however, have a rather extravagant lifestyle. Janice is a major shopper, and while Michael doesn’t buy things frequently, he likes his expensive toys.

Clearly their priorities are not conducive to having a prosperous retirement. Their 401(k)s offer a great opportunity to amass a lot of wealth over the long haul, but they aren’t taking full advantage of it.

Everyone should make every effort to get the full match from his or her employer. It’s free money; no one in their right mind should leave free money on the table. You might think you are barely able to make it from paycheck to paycheck, but if it is tax free and taken out before you ever get your hands on your money, then you will hardly miss what you never saw, but it can add up to big dividends long term.

While savings bonds are better than nothing, they are a very poor choice for someone with a long-term time frame. This couple would be much better served with more growth-aggressive investments.

Appropriate stocks and some bonds for diversification would be more in line with their goals.

Their combined income is quite high, but it is largely being wasted on non-essentials and luxury items, as it often is when people are young and have no real financial goals yet.

Considering they don’t have children and minimal debt, saving 15+% of every paycheck should be easy for this couple. They would be well served to examine their spending and eliminate the excess.

This couple still has time before they retire; they certainly have every opportunity to turn things around to provide for a wonderful retirement and any other goals they might have, especially if they do not have any children.


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