February 20, 2024

Skiing & Investing

By Michael McKeown, CFA, CPA - Chief Investment Officer

Skiing & Investing

Imagine standing at the top of the mountain. You can see for miles. The sun is shining and clouds are floating by – it is beautiful.

You look around. You can see the edges of jagged rocks under the surface of the snow. Trees litter the trails and paths. The wind blowing howls through your helmet.

The anxiety creeps up. You realize, “I have to figure out how to get down from here.”

  • Option 1: Ski around and meander down the hill.
  • Option 2: Take an aggressive line down the face of the mountain.
  • Option 3: Go somewhat in between, being aggressive in spots, enjoying the trees and views, while resting along the way.

There is no right answer. You’re trying to get to the bottom and maximize your fun along the way.

But there are risks.

The rocks can damage your skis. The steep parts could make you lose balance and fall. The lower risk path might take longer.

Individuals have many choices to get down the mountain in their financial lives.

Fortunately, they can choose the right path for them.

Within an investment portfolio, people can use multiple asset classes, rebalance portfolios, and take a long-term perspective while others may be short sighted.

Individuals control the process.

On the planning side, they can control taxes, estate goals, insurance options, and debt management. They can use strategies to maximize the take home amounts for compensation, business exits, and equity options.

It comes down to choices. There are no wrong answers, only tradeoffs.

For investing, it might be an aggressive portfolio, which comes with more volatility along the way.

For planning, it might be saving less now, which increases the time horizon to reach the goal.

Skiing down the mountain is going to be a challenge regardless. Swirling snow, foggy conditions or the person that just cut you off right in your path.

Responding to these obstacles with a thoughtful plan and execution is the key to getting there safely and having fun along the way.

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