Diversifying Pays Off

The Browns use disciplined investment approach

“In this market, I am moving investment decisions toward the couple’s tactical [short-term] allocation, and I’ll sit on this allocation until the summer’s end,” explains Chandler. “As the market begins to turn more favorable, we’ll move away from the tactical allocation back to our strategic [long-term] allocation.”

The couple will then restructure their asset mix so that they have 50% of their holdings in equities and the remaining 50% divvied up among alternative investments (20%), fixed-income (20%), and cash (10%). “Certain things worked in our favor and we took advantage of it,” says Bruce. “Now we can sit back and be conservative until things in the market change.”

As the Browns reallocate assets, they expect to continue to make strong gains and reach their $5 million goal early. Chandler put the couple on a plan in 2004 to contribute $100,000 per year to their portfolio. Once she evaluated the couple’s goals, she knew they would have to exercise restraint to stay on track; they have proved that they have the discipline to do so. In fact, the 529 plan for their 4-year-old daughter, Emma, is already near California’s maximum contribution of $320,000. “Our daughter’s college plan is well on the way to being funded,” says Lisa. “Our child comes first,” echoes Bruce. The couple is now expecting their second child.

In the meantime, the Browns want to have access to enough money to support their globe-trotting habit: The family travels four to six times a year. “As our daughter gets older, and with another child on the way, travel will be more important because of its educational value,” says Bruce. Last year, the family visited Mexico; this year, they plan to visit France and Spain.

But reaching their $5 million target is the Browns’ priority, with the help of their financial adviser, who is optimistic. “Conservatively, with the amount of equity exposure we have, we will meet our goal,” Chandler says, assuming a 9% rate of return. “Based on their allocation, if they stay the course, they should be fine.”

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