Tools are great for Father’s Day – and for investors

Brian Schrock is a financial adviser with Edward Jones in Fallbrook. Courtesy photo

FALLBROOK – If you’re a dad, you may well be pleased to unwrap some tools as Father’s Day gifts. Of course, it might be a stereotype that all men are handy at repairs; women certainly can be every bit as good when it comes to building and fixing things. In fact, the construction process is valuable for anyone to learn – and the same skills that go into creating and mending physical objects also can be applied to financial projects – such as working toward a comfortable retirement.

The first skill is diagnosing the challenge.

A good craftsperson knows that the first step toward accomplishing any outcome is to assess the challenge. So, for example, if a homeowner wants to build some bookshelves right into the wall, they’ll need to locate the wall studs, determine if they have adequate space for the shelving and allow room for future expansion. Similarly, if people want to retire at a certain age, they’ll need to consider the key variables. Consider current and future income or how much can they can count on from retirement plans. Think about where they’ll live or if they will downsize or relocate. Will they rent or own a house or condominium? And what they’ll do as a retiree. Will they travel extensively or stick close to home? Will they do some type of work for pay or pursue hobbies and volunteer?

Next, a builder learns to assemble the right tools and materials.

To put together a bookshelf, a homeowner will need the right tools – saw, hammer, drill, sander and so on – and the right building materials – plywood, nails, screws, glue, brackets, moldings and so on. And to work toward a comfortable retirement, people will also need the right tools – in the form of a long-term financial strategy, based on their specific retirement goals, risk tolerance and time horizon – along with the appropriate materials – the mix of investments they’ll use to carry out that strategy. These investments include those placed in an individual retirement account, a 401(k) or other employer-sponsored retirement plan and those held outside formal retirement accounts. Ideally, they want a diversified mix of investments capable of providing growth potential over time, within the context of individual risk tolerance.

Last, they should review their work.

Once a homeowner has finished their bookshelf, they occasionally may need to make some minor adjustments or repairs in response to slippage, cracks or other issues that can develop over time. As an investor, people also may need to tweak their financial strategy periodically and adjust their investment mix – not necessarily because something is broken, but to accommodate changes in life, such as a new job, new family situation and new goals. Furthermore, over time, people’s risk tolerance may change, and this adjustment needs to be reflected in their array of investments.

Consequently, conducting an annual portfolio review with a financial professional should be a priority.

Tools are a big deal on Father’s Day, but the construction-related tasks they represent, physically and symbolically, go beyond any one holiday and can be used by anyone interested in working toward a solid financial future.

Provided by Brian Schrock, financial adviser, located at 1434 S. Mission Road, Suite B, in Fallbrook. Call (760) 731-3234 for more information.

Submitted by Edward Jones.