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Spring Clean Your Way to Investment Success!

By Eve Kaplan, CFP® Practitioner

I’m going to suggest two things are possible in the next several months:

1) the relentless cold, snow and ice will become a fading memory and
2) it’s possible to Spring Clean you way to a better investment life – based upon advice from a sage Wall Street veteran.

I’m taking my cue for Spring Cleaning from a prominent figure in the financial planning world: Gordon Murray. Mr. Murray, a Wall Street veteran and recent Dimensional Fund Advisors consultant, passed away recently from brain cancer. Gordon decided to cease treatment for his terminal cancer last June. He dedicated the last months of his life to writing a book (with his financial advisor, Daniel Goldie) called “The Investment Answer.”  The book was completed before Gordon passed away – allowing him to see this project to fruition.

Gordon embraced simple ideas that could benefit the investment lives of all Americans. The book is simple and elegant. After more than 25 years on Wall Street, it manages to boil things down to 5 simple principles that can have a far-reaching effect on your investment life.
Here are the 5 decision points Gordon Murray recommends you embrace:
1. Hire an advisor who earns fees from you, not from mutual fund or insurance companies (Daniel Goldie works that way – not by coincidence). The thinking here is that commission-based advice-giving can never be as objective as advice that puts your needs before those of the advisor. It’s very hard to give objective advice when an enticing commission lurks behind the scenes.
2. Divide your money into a number of buckets: stocks & bonds, big & small, value & growth. I would add here that a large majority of investors – when in doubt – are well-served by a 60/40 stocks/bonds portfolio. I also would add that the Dimensional Fund Advisors bias favors small over big, and value over growth. 80+ years of investment data underscore the fact that small is better than big, and value outperforms growth.
3. Divide your money further into domestic and foreign buckets. Your home currency is the US dollar and that won’t change unless you plan on retiring in a foreign country. That said, the US percentage of global stocks is shrinking as other markets and economies outpace US growth. You want to consider holding global bond mutual funds, and having sufficient international exposure – directly through international and emerging market mutual funds, and indirectly through large US conglomerates who sell around the world (e.g. Coca Cola and Caterpillar).
4. Decide if you want to invest “actively” or “passively” through mutual funds. I will add here that I’m a former fund manager who embraced active management (stock picking) at the time, but I’ve converted to the passive approach. The passive approach doesn’t aim to do better than markets (and, by adhering to an index, typically doesn’t do worse, either). Costs are lower and some studies show passive investing beats the pants off active management, net of fees.
5. Rebalance regularly. This means you sell your winners (prune them back) and buy more losers. This strategy means you’re one step ahead of most individuals, who bolt for the door when things get bad, and crowd into something near its top. It means you go against your gut reaction (which tells you to buy something when it’s often too late, and sell something when it already has fallen).

If you don’t think you have the discipline to follow Gordon Murray’s 5 simple steps on your own, consider Step 1 (hiring an advisor who earns fees from you) as your starting point.
Spring Cleaning your investment life means you clear out the extraneous clutter, junk expensive or unattractive investments and streamline everything so it’s consistent with your risk tolerance. Doing this sooner – rather than later – means you can get to the goal line (the end of your life) and accomplish everything you need to do that costs money.

Eve Kaplan is a Fee-Only Certified Financial Planner in Berkeley Heights. Kaplan Financial Advisors is a Registered Investment Advisor in New Jersey and New York. Her firm provides financial planning for individuals, and 401k/403b plans for companies. She can be reached at 908-898-0549 or