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Q4 Financial Planning Commentary

We’ve all had moments where we find ourselves faced with a decision that we seemingly are unable to make. Whether caused by anxiety, fatigue, or a pileup of higher-priority issues, it seems from time to time that the easiest course of action is to simply ignore it. While this may be a workable strategy for lower-stakes choices, it is also an unfortunate reality that arises in one’s financial life. This kind of “investment inaction” is played out in many ways, often silently, invisibly, and with potential consequences to an individual’s future financial security.

Let’s review some of the forms this takes.

Retirement Plan Decisions

One of the worst decisions may be the failure to enroll in a company-sponsored retirement plan such as a 401(k). Not only do non-participants miss out on one way to save for their retirement, but they also forfeit any potential employer-matching contributions. Not participating can be a costly decision. Fortunately, under the SECURE 2.0 Act, most employers will be required to automatically enroll employees in retirement plans starting in 2025.

The other way individuals let indecision get the best of them is by not selecting the investments for the contributions they make to the 401(k) plan. When a participant fails to make an investment selection, the plan may have provisions for automatically investing that money. And that investment selection may not be consistent with the individual’s time horizon, risk tolerance, and goals.

Other Portfolio Considerations

For homeowners, “stuff” just seems to accumulate over time. The same may be true for investors. Some buy investments based on articles they have read or based on the recommendations of a family member. Others may have investments held in a previous employer’s 401(k) plan.

Over time, we can end up with a collection of investments that may have no connection to our investment objectives. Because of the dynamics of the markets, an investment that may have once made good sense at one time may no longer be advantageous today.

By not periodically reviewing what we own, which would allow us to cull inappropriate investments – or even determine if the portfolio reflects our current investment objectives – we are making a default decision to own investments that may be inappropriate.

The Waypoint Journey

These are a few of the reasons why the Waypoint Journey begins each year with a cash flow and investment plan review. In order to ensure that your portfolio is working in harmony with the rest of your plan, it is important to review all of the assumptions we are working under and any of the “default” decisions that have been made up to now. When it comes to your financial security, we don’t take anything for granted.

As always, please do not hesitate to reach out if you have questions about your own tax situation, or anything else.


Waypoint Capital Advisors