Timing is everything! Many people have crossed my path over the years, and some have done much better than others. Why is that? With all other key factors remaining equal – strategy, funding, education, or marketing – the primary difference was due to timing. For example, it made sense to buy a home in 1996 but not in 2006 when housing prices peaked; an industry that experienced phenomenal growth in the 1990s may not do so in 2014.
Timing your investments. Recently MasterCard, Inc. (MA) announced an 83% dividend increase and a 10 for 1 stock split. Are you thankful you owned MA prior to the announcement? If so, you will have a larger tax liability due to higher dividends. Or did you happen to buy MA the day after the share price increase? Well, the right answer for you depends on your need for cash flow, your tax situation and overall portfolio. The efficient-market hypothesis states that at any moment in time, stocks are correctly valued, and that one cannot consistently achieve returns in excess of average market returns. Don’t even consider market timing as there are thousands ahead of you, not to mention that high-frequency trading now places trades in nano-seconds for those firms to profit first.
Timing your life events. If you want to buy a new car for Christmas, is it best to take delivery on New Year’s Day instead? Your financial plan should outline the timing of both acquisition and disposition of all assets. It is better to have a plan and miss a financial goal, than to not have a plan at all. Regarding social security, just because you’re eligible doesn’t mean you should take it; your spouse taking income first, or a deferral, may be best. For your estate, consider gifting now while you are living to see the beneficiaries appreciate your generosity, or the traditional way gifting, from the grave. One will definitely have an advantage to your estate, so ask your team if you should gift now or later.
Timing for today. What worked in the past may not work in the future. How do you know if your new business venture, or buying a home, is right for you? From taxes, to cash flow, to industry timing, to legislation from Washington, to your family legacy planning, every financial step you take should have a stamp of approval from your CPA, CFP, estate planning attorney, and insurance experts. Not one of them, but all of them, should have input into your financial decision.
Most importantly, understand there are hundreds of solutions for your financial decisions. Advanced planning solutions – ranging from your trust, to life insurance, to natural gas and other alternative investments – could better impact your bottom line than only regular portfolio re-balancing.
Ask questions. Be a contrarian. Seek more. Have a team of professionals.
On a personal note, what is more important in life than money? Remembering that spending time with family, friends and key business partners is most important. It is likely on your deathbed that you won’t ask for more money; rather, you will ask for more time with those you love.
Rumbaugh Financial, Inc. is a Registered Investment Adviser and Craig Rumbaugh is Principal. He can be reached at (760) 341.5010 or visit www.RumbaughFinancial.com.
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