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MY FIRST RESOLUTION for 2022 is to clean up my investment portfolio. While my garage and my closets are in good order, I shudder when I review my brokerage account.
Over the years, I’ve accumulated close to 20 mutual funds and exchange-traded funds. Overall, I’ve done well with these investments—most of which are based on stock market indexes—but it’s an unnecessary hodge-podge. By the end of the year, I plan to sell a majority of these positions and consolidate the proceeds in a target-date fund. I value the simplicity of target funds, with their regularly rebalanced mix of U.S. shares, international stocks and bonds.
My second resolution for 2022 is to update my life-insurance strategy. When my son was born in 2007, I purchased a 15-year term policy. That policy expires in June 2022. First, I need to consider whether I should continue to carry life insurance. Given the increase in our savings over the past 15 years, life insurance may be an unnecessary expense. If I do opt to keep coverage, I’ll weigh whether it’s prudent to continue with term insurance or shift to a whole-life policy. This latter wasn’t on my radar in 2007, but my basic understanding of whole-life insurance tells me it could be worth considering.
My third resolution is to create an investment roadmap for my wife. I periodically update her on the value and composition of our portfolio. Still, she’d be hard-pressed to take over management of our investments. My plan is to create a document that describes our accounts, including our brokerage, retirement, custodial and 529 plan accounts. I’ll also document our passwords—in a secure manner, of course—and provide the numbers for her to call if she needs to talk to someone about the accounts.
A final note: Thank you to those readers who have provided insightful comments on my 2021 articles and blog posts. I’ve learned a lot from you—especially regarding hybrid and electric vehicles—and I look forward to getting more feedback in the year ahead.
Hi Kyle,
Your third resolution is definitely the game changer for me. When I consider the amount of “tribal knowledge” I hold in relation to our investments and overall financial situation its something I definitely need to provide more clarity on.
First step is to map it out and I have a feeling once its transparent there are going to be steps of consolidation and elimination of a few financial instruments in there.
I created a “financial navigator” document I title “Read THIS First When I Die” and store it with our wills. It includes all our accounts – with account IDs and passwords – and a paragraph about why we have the account, how it is used, what I would hope is done with it going forward, etc. I probably got the idea many years ago from reading a Jonathan Clements article…
That’s exactly what I’ll be doing, Not sure I’ll us that exact title, but that will certainly be the purpose of the document.
Many years ago, when my first son was born, I purchased a whole life insurance policy. It may have been a mistake, as it is an inefficient investment vehicle, but it did grow in cash value through the years. Fast forward 25-30 years: In short, I didn’t die, so I didn’t need life insurance for that purpose. Both of my kids are now in their 30’s. I’m no longer married to their mother and have remarried. I converted the cash value from the insurance policy into a fully funded long term care insurance policy. It won’t cover everything if I become a bedridden human vegetable, but it will soften the blow for my wife and kids if they need to address the costs of my care at my end-stage of life.
Kyle I’ll be interested what you decide on whole life. I did it six years ago and overfunded my policy and have it for my tax-free cash/ bond substitute yield. No instant gratification as took six years to showing good returns. Good luck.
Thanks James. In my preliminary research, it seems like using the policy for the purpose you describe is the way to go. I’ve also seen a feature that allows you to drawdown some of the CSV to pay for long-term care via the whole life policy, so that’s appealing as well.
I’m not advocating any specific company, but my Mom retired and had all her funds in Vanguard. Whether it be her grandson’s (my son’s) 529 plan, or her ROTH, her Traditional IRA, and brokerage. And Vanguard also has target date funds which part of her IRA is in. The benefit of all this, is you’d be consolidating all investments with one company’s web site with one password to access all your funds, stocks, etc,. And you can also give your wife power of attorney over it. This way everything is in one place and she has instant authority to access the accounts if you were to ever become incapacitated and she needed access.
We’re in a very similar boat today with Schwab for most accounts, so that should help quite a bit. Would probably prefer the lower cost funds offered by Vanguard relative to Schwab, but I have really liked Schwab’s customer service over the years. Laying out the purpose of each account as well as the order to access the funds down the road will be a big part of the map.