海角大神

With the exception of my wife, my grandmother is the most inspiring person I鈥檝e ever known. I don鈥檛 know where I would be today without her. Although we didn鈥檛 always see eye to eye, especially on financial matters, I learned an extremely valuable investing lesson from her.

Members of the Greatest Generation, my grandparents came of age during the Depression, a period marked by severe distrust of financial institutions and an extreme aversion to risk. After my grandfather died, my grandmother had to manage her finances for the rest of her life, 28 more years.聽The way she handled her money reflected her upbringing, her deep dislike of risk and her commitment to her goals.

In addition to having money in聽聽at several banks (to ensure that she was covered under the $100,000 FDIC limit per institution), she had a brokerage account, which was invested in CD ladders. CD ladders are CDs structured to mature at different times to ensure stable reinvestment rates.聽She chose this option because she did not want to shop around for the聽.

Toward the end of her life, she did allow a small amount of money to be invested in conservative mutual funds. When she died, her estate was worth about $700,000.

Why this was the right strategy

Is this the right approach?聽Many advisors would be quick to point out what my grandmother could have done better or how she could have made more money. They would tell you that she would have had over $1 million (or $2 million or more) had she invested with them.

But for my grandmother, it was absolutely the right investing strategy. Why? Because she didn鈥檛 lose a night of sleep worrying about her money, and she died with zero debt. To my grandmother, a 100% chance of leaving a considerable estate was infinitely better than taking on risk that could hurt those odds. She did not care for beating the market and she didn鈥檛 worry about interest-rate risk, inflation or anything else, for that matter.聽She cared about conservation of capital.

Now, I don鈥檛 completely agree with my grandmother鈥檚 investing strategy, but I do believe that any investment strategy needs to support its owner鈥檚 goals. A financial advisor may help you conceptualize, develop and even implement plans, but you are the only person who will know whether your financial plan bolsters your aims.

How to make sure your plan is right for you

So, how do you determine if your plan is reinforcing your life goals?聽I call it the sleep test. Simply put:聽If you鈥檙e losing sleep due to your finances, your current plan has not passed the sleep test.

Failing the sleep test is a call to action. If you have a financial planner, it鈥檚 time to set up an appointment to discuss your concerns.聽If, after you鈥檝e talked about your worries, you still don鈥檛 feel comfortable with the advice you鈥檙e getting, you should think seriously about finding a new advisor, preferably based upon a recommendation from a friend or family member.

If you don鈥檛 have an聽, or cannot find a good recommendation, a good place to start is the聽. Members pledge a fiduciary oath to place their clients鈥� financial interests before their own.

A financial planner can鈥檛 tell you whether your plan is supporting your goals 鈥� only you can do that 鈥� but your planner can help determine whether your plan is on track.

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