Ask someone near their exit when they plan to reduce the risk in their portfolio, and you’ll usually hear one of two answers.
“When the market looks better,” or “When I’m closer.”
Neither is a date.
In the Break Test, the question was what you would be forced to do if the market fell before your exit. The question that should come first is what will you already have done by then to prepare for it?
Why waiting costs more than it feels like
A loss and the gain needed to repair it are not the same size. Lose 30% and you need about 43% to get back to even. Lose 50% and you need 100%.
That’s simple math, not a forecast.
It matters because repairs take time. Someone twenty years from needing the money can wait for the recovery to happen. Someone eighteen months from a sale or a first withdrawal usually doesn’t have that luxury.
A decline is temporary right up until you’re forced to sell into it. Then it becomes permanent.
The market shouldn’t set your date. Your mood generally does.
Waiting for the market to look better is a forecast. Waiting until you’re closer to your exit date is a feeling. Both leave the decision for a moment you don’t get to choose — and if that moment turns out to be a drop, the decision gets made by whatever you’re feeling at that time.
A schedule moves the decision to a day when you can think. Pick the date now. Decide what changes on it. Let the calendar do what a feeling won’t and stay in control of your exit.
Proverbs 22:3 isn’t about portfolios, but the message still fits - the prudent see danger and take cover; the simple keep going and pay for it.
Proverbs names the posture. Homer in The Odyssey shows it in action.
Odysseus knew the Sirens’ song would overpower his judgment, forcing him into a fatal decision. So before the ship reached them, he had the crew plug their ears with wax and bind him to the mast, with one instruction: if I beg you to let me go, tie me tighter. The decision that mattered was made before the song began. The song only tested it.
A date on your calendar is your mast.
This week’s tool: The Date Line
Two questions for you to consider.
First, what date is your exit — the sale, the last vesting date, or the first withdrawal?
Two, what date does your portfolio risk start coming down — and what’s the first thing that changes on it?
The answer to line two will depend on your path:
· Owner — the first dated move into assets outside the business.
· Executive — the first scheduled sale. A pre-arranged selling plan, reviewed with your attorney, does this.
· Professional — the first step down in allocation ahead of the first withdrawal.
If line two reads “when the market recovers” or “when it feels right,” you’ve written a feeling. If it’s blank, that’s the finding — and a fine place to start. Write a date you could defend to your spouse or your CPA, then adjust it from there.
A date can be moved. A feeling can only be waited on.
The Next Step
If line two came back blank — or read “when it feels right” — that’s worth knowing while there is still time to put a date on it.
A Freedom Audit is a focused 30-minute conversation that turns the feeling into a schedule, across all three numbers and all three paths. Schedule your FREEDOM AUDIT.