Rational Investing: Financial future should be planned like vacation

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Clark Davis is a 34-year investment veteran and CEO of Saint Louis Investment Advisors, a specialized money-management company.|ret||ret||tab|

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By the time you read this I will be back from my mini-vacation in the Florida Panhandle. Nothing like the Maui entrenchment that Rusty Saber enjoys, but just enough of a climate change to get rid of the shivers and perhaps alter the turf conditions on a couple of Destin area golf courses.|ret||ret||tab|

No chance of challenging Uncle Larry to a round this trip, a normally futile endeavor, but one I was contemplating excitedly, since he is recovering from by-pass surgery and would be somewhat less proficient. Sorta like the only other time I beat him. He was, as you may remember from a previous column, recovering from a heart attack he suffered a couple of months before and was not quite on his game. The edge went to me that round, aided by the fact that I asked if I could have his clubs if he didn't survive that day.|ret||ret||tab|

This trip, no golf for him. Not for another month or two damn. Instead, we will reminisce about other games and other places and savor a wee dram or two of heart-healthy single-malt adult beverages.|ret||ret||tab|

Larry and Sally's place is the third stop Linda and I make every year on our way to Florida, the first being for a Cracker Barrel breakfast in Mt. Vernon or Marion, Ill. The second is Franklin, Tenn., for a fill up of gas at the BP station and a fill-up of barbecue, beans and sweet cornbread at Herbert's, provider of pulled-pork sandwiches that are the standard by which all real barbecue should be measured. |ret||ret||tab|

The fourth stop is in Birmingham, Ala., for the barbecued ribs they don't get any better than what you find at Dreamland. (Although the place is getting a bit up-scale. Used to be that the sign over the bar read "No Beans No Cole Slaw Don't Ask." They have added both recently, giving one options to go along with the loaf of bread in its split wrapper and dish of to-die-for sauce accompaniments. |ret||ret||tab|

The last stop on the south-bound journey depends on how well I pay attention to the road signs, which in turn is what determines from which direction we arrive in Destin. Doesn't much matter. We have no pig-out establishments to visit along the way. We just need a place to pull over and enjoy the pound or two of the Tennessee pulled pork we conveniently stashed in the cooler. Beats the heck out of an RC and a Moon Pie.|ret||ret||tab|

No, I haven't forgotten that this column is supposed to be about rational investing. Trust me, there is a point to all this.|ret||ret||tab|

Every bit of the way (except perhaps for the last 30 or 40 miles north of the Alabama/Florida state line gotta have some spontaneity) we have planned out in advance. Actually, it was all planned out in advance several years ago when we first started making the trip.|ret||ret||tab|

Starting to see my point, right? Not too subtle, I'll admit, but bear with me.|ret||ret||tab|

Here's the message: Most folks spend more time planning their vacation than they do planning their retirement or their investment portfolio. And even if they do plan for retirement and set up a plan for investing, that plan is usually only infrequently checked. Don't get me wrong, you don't have to check it three times a day as we do our eating establishments on our chomp-along trip, but at least annually, preferably once a quarter.|ret||ret||tab|

That means starting out with a discipline based on what your goals and risk tolerance are, not those of a financial advisor, friend or accountant. It also means not rushing to buy whatever were the hottest mutual funds of the previous year. It also means not putting too many eggs into too few baskets. Diversify your portfolio among styles and asset classes. Don't forget international investments, an area that, as they have limited correlation to the U.S. markets, can produce good results when our domestic markets.|ret||ret||tab|

For an informative look at how various categories of investments have done over the past 20 years, check out the Callan Periodic Table of Investment Returns. It is found by clicking on the subject "resource center" at www.callan.com. You won't see a pattern to use to select the best investments for the coming years, but you will see the value of diversifying your portfolio.|ret||ret||tab|

The question is, "How do I know how to diversify my investments for my particular situation?"|ret||ret||tab|

We'll delve into that problem next month, so stay tuned. |ret||ret||tab|

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