The Herald Bulletin

November 22, 2013

'Big Joe' Clark: Organize your financial life

The Herald Bulletin

---- — Things change all the time. Over the last 25 years my waistline grew bigger and then smaller.

Styles of clothing have gone in and out and in some cases, back into fashion. Things have worn out or lost color. My closet should have been updated for various reasons, not to mention seasonal adjustments. I should have adjusted along the way but I did not and today the task of updating appears daunting. Thus I will most likely delay doing anything. The task feels tedious; I know it is overdue, but there is nothing creating a sense of urgency for me to take action today.

Portfolios are often like closets. Over the years you made different investments in stocks, bonds and mutual funds. You have stray IRA accounts, an employer plan or two, and don't forget your spouse’s accounts. We know that having multiple accounts is less efficient — and sometimes even expensive — but we don't know where to start in the cleaning project and, again, there is no sense of urgency.

There are a few things we need to do and there really should be a sense of urgency. It is easy to have multiple accounts when you don't have tax reporting every year on retirement accounts and IRA holdings, but there will be a day of reckoning when you need income or when required minimum distributions begin.

Unlike my out-of-date clothing, extra accounts don't just take up space in terms of additional statements but they increase the probability that future mistakes will take place.

There are shirts in my closet that bring back great memories. These memories are invaluable to me. Many times portfolios have investments that do the same thing. You invested $1,000 in 1980 and it's worth a chunk of money. The problem was it was a bigger chunk of money 10 years ago! This happens way too often.

There are also times when the seasons have changed and sweaters are in and shorts are out. Economies have seasons too, especially when you have governmental or Federal Reserve intervention, as we do right now. There are investments that made sense a couple years ago that are less advantageous with massive amounts of quantitative easing (QE), not to mention the tax code changes for 2013 and beyond.

Some outfits never really made any sense at all, but they seemed right at the time. Think back to the companies of the late 1990s that perished in the tech wreck. Those investments died a quick death and were removed from the closet to eliminate any long-term bad memories.

It is OK to keep a few old shirts or high school letter jackets in your closet. It's not OK to keep your financial future tied up in an investment that was good to you in years past. The season is changing and the wardrobe needs to change as well. The sense of urgency may not hit you with a 2-by-4 today but it will in the future.

Joseph “Big Joe” Clark, whose column is published Saturdays, is a certified financial planner. He can be reached at or 640-1524.