The Gift That Keeps on Giving: An All-Weather Financial Plan



By Greg Fields
12/04/2018

I am not a Grinch. I love Christmas; honestly. But my family kind of went nuts for the Holidays. They’d start shopping in July and didn’t throttle back until Christmas Eve. I realize this is an ear-popping, high level problem, but we opened so many presents on Christmas morning that the whole exercise was kind of a burden. We’d stop halfway through because all of us were getting “hangry” from extended calorie deprivation. As fortunate as I was, I’d look around our shag-carpeted family room strewn with torn wrapping paper and think, “Did I really want/need a hot air corn popper; or a chartreuse Members Only jacket?”

My point is, the utility of most Christmas gifts is equivalent to the half-life of a bunch of store-bought bananas (worse if they’re organic). But surprisingly, many people manage their financial plan much like an unloved Christmas present. As many as 50% of all Americans don’t have a plan in place at all. Those that do probably didn’t design a robust plan to begin with. That weakness – like credit card interest – only compounds over time and ends up working against you. Unlike most Christmas presents, a great financial plan can literally be the gift that keeps on giving year after year. But there are a few key principles that are a must when constructing your personal financial roadmap.

Remember how Grandma gave you a $10 check at Christmas every single year for twenty years in a row? You were gracious about it, but you probably wanted to respond with, “Thanks, Nonni! Guess I’ll get crazy and buy one and a half almond lattes!” Obviously, Granny isn’t an economist, but she should at least understand the concept of inflation. The basic idea is: your money is worth at least 3% less every single year. Inflation literally erodes purchasing power over time, so you need to account for it in any financial plan. Otherwise, a champagne portfolio today will be a double-wide, Budweiser portfolio tomorrow.

Those burgundy corduroy pants I once got for Christmas looked fashion-forward back when they played Duran Duran videos on MTV; but now? Not so much. Your life changes and a solid financial plan needs to flex with those changes. Unless you’re having a mid-life crisis, you wouldn’t go out and buy a mid-engine, two-seater Ferrari as primary transportation for your family of four and two dogs. In the same way, your financial plan is not going to “fit” unless you consistently assess and tweak it with the help of a good financial advisor. Life doesn’t stand still; things change and so do your needs. The set-it-and-forget it strategy behind most financial plans is about as useful as those 28-inch waist corduroys are for me now (I have a 29-inch waist now…not).

And finally, most plans aren’t comprehensive enough to provide families with a sufficient degree of protection. A good plan should incorporate all aspects of your financial life, not just your investments. If you have a family, you need to include some form of life insurance. Setting up a trust is also a must for most families. You do NOT want your assets in probate, trust me. It’s expensive, time consuming and makes your estate public for every scammer and schemer to see.

By all means, go out and get that Led Zepplin Mothership Vinyl boxed set for Christmas. You deserve it! But you and your family also deserve the best gift you’ll ever give yourselves: an all-weather, sturdy but flexible financial plan. It will make future holidays even more jolly. And put that Members Only jacket up for auction on eBay. Seriously.

Greg Fields is a Financial Advisor of Santa Monica, Calif-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately $800 million in assets under management as of 7/04/18. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. Readers shouldn’t buy any investment without doing their own research to determine if the investments are suitable to their situation.