Not My Priority

SOME YEARS AGO, I had a health scare—and it taught me an important lesson about my relationship with money. My primary care physician wanted me to see a hematologist. “Your white blood cells have been trending lower for the last five years,” he opined. “We need to find out what’s causing it.”

After a number of tests, the hematologist thought I might have a rare blood disease. He said the test results were inconclusive, but I fit the profile. He wanted to confirm his suspicions by performing a bone marrow biopsy. He went on to say that there was no cure for the disease, but there were drugs that could extend a patient’s life.

The doctor’s comments shook me to the core. Suddenly, I faced the possibility that my time on earth might run out far sooner than I expected. I started thinking about the things in my life that are important to me. How do I protect, experience and enjoy them? The following were the first things I did after leaving the doctor’s office that day:

• I reviewed the beneficiaries on my retirement accounts to make sure the people who are important to me would be taken care of.
• I reviewed my trust to confirm it reflected my current wishes on how my estate would be distributed to family, friends and charitable organizations.
• I verified that the powers of attorney for my finances and health care were in order. I wanted someone who could oversee my affairs if I became incapacitated.
• I checked my passport to make sure it hadn’t expired. I wanted to visit many countries and landmarks that I hadn’t yet had a chance to experience.

Looking back, I realized the things that were most important in my life during this stressful time—besides my health—were my family, friends and life experiences. What I didn’t care about: buying a new car or how my investment portfolio was performing. Before the health scare, tracking the stock market and my investments were an everyday ritual. I now realized those shouldn’t be my life’s main focus.

Want to spend less time thinking about money? Here are nine investment pointers that may help you fret less about your portfolio—so you can focus on the more important things in life:

1. Invest in broad-based index funds. You can sleep well at night knowing you’ll never underperform the market. Your portfolio’s return will be tied not to a fund manager’s investment selection, but directly to the stock market’s actual performance.
2. Buy those broad-based index funds through a target-date fund or a balanced fund. You’ll suffer less volatility during periods of extreme market swings.
3. Another way of weathering volatility: diversify. Allocate part of your money to bonds, certificates of deposit, stable value funds and high-yield money market accounts.
4. Hire a fee-based financial advisor to manage your investment portfolio. You’ll not only get investment advice, but also emotional support during turbulent times.
5. Avoid owning too much of one company’s shares. Limit your exposure to any individual stock to 5% of your stock market portfolio.
6. Remember that investing for retirement is a long journey. Wealth is built over decades. Bear markets and economic downturns are part of the process. Don’t focus on what’s happening day to day in the market.
7. Rebalance your portfolio periodically to maintain your desired weighting of each asset class.
8. Create a written plan listing your investment goals and strategies. During periods of market volatility, this can be a useful reminder of what you settled on in calmer times.
9. Most important: Don’t look too frequently at your investment portfolio. You’ll be less tempted to make changes—and you’ll experience less emotional stress.

Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. His previous articles include Power of Two, California Dreamin’ and Wrong Approach. Follow Dennis on Twitter @DMFrie.

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