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Lessons Learned From Wolves FINANCIALLY Speaking I 1. Jeffrey M. Orth is a Chartered Financial Consultant, a Certified Advisor in Senior Living, and an Investment Advisor Representative, with over 15 years of experience as a business and personal planning, insurance, and wealth management specialist. Jeff is available for group lectures and private consultations. Visit integrated- or call 408.842.2716. The author’s opinions, com- ments information, etc. are those solely of the speaker and are independent of, and do not represent, HTK, and should not be considered as specific investment or plan- ning advice. Please consider your options based on your individual circumstances. Past performance is not indicative of future returns. Gilroy Today and other listed entities are indepen- dent of and un-affiliated with, HTK and Integrated Financial Benefits Network. 2200597RM-Aug20 saw a story last summer about Yellowstone National Park that talked about the importance of balance in nature, and it occurred to me that there were many parallels between balance in nature and having balance when it comes to investing. The story centered around a “trophic cascade,” which is essentially an ecological process that starts at the top of a food chain and then has an effect on the surrounding ecosystem. In this case, it was the 1995 re-introduction of thirty-one wolves to Yellowstone after a 70-year absence, that resulted in a rather profound “trophic cascade”. Since wolves are at the top of the food chain, their absence created an imbalance in nature. The deer population grew to unmanageable levels and the park’s natural vegetation was decimated, a result of too many deer and not enough food. The re-introduction of wolves had an immediate impact, as they began killing some of the deer. But there were other things that changed as a result of the return of wolves. Since the deer were now being hunted, they began to change their migration patterns, steering clear of certain valleys and gorges that were easy hunting grounds for the wolves. As a result of that change, the vegetation in those areas came back dramatically. The trees grew rapidly, birds returned to the trees and beavers moved back into the ecosystem. The beavers, in turn, built dams that created habitat for fish, otters, ducks and more. The wolves also killed coyotes, so there was an increase in rabbits and mice, which gave rise to the populations of hawks, eagles, foxes and badgers. The increase of vegetation and berries helped the bear population grow. And the rise in the bear population helped the wolves further reduce the deer population. Over time, as the vegetation grew back and the ecosystem came back into balance, erosion decreased and river banks became more stable. This created new directions for the water to flow which actually changed the course of rivers in Yellowstone. Removing one key element, in this case the wolf, upset the natural balance, resulting in a profound effect on many other areas. All of this reminds us of the importance of balance. As in nature, balance is critical when it comes to finances and retirement, and not just the balance between stocks and bonds. There are other important considerations, such as the bal- ance between liquid assets (bank) and non-liquid assets (home equity). Balance also becomes more important when you consider the single biggest risk to those that are near or in retirement-taxes. People often have money in taxable investments (401k, 403b, IRA) as well as non-taxable money (Roth-IRA, cash value life insurance). But if all of your investments are taxable and rates go up, you will pay more in taxes, leaving you with less to live on. Everyone has an opinion on what will happen with taxes in the future, but most feel that taxes have nowhere to go but up. Are your investments balanced so that you have some options when it comes to your taxable income? And if you are counting on the equity in your house to fund your retirement, what happens to your plan if there is another housing crisis? Will you be able to access that equity when you need it? Just like Yellowstone, you can create a healthy balance to your financial ‘ecosystem’ by placing your retirement plan on a better trajectory towards success. Of course, there is no single plan that will work for everybody - achieving balance requires individual and holistic planning. Change is often viewed as risky, but in much the same way that wildlife and fishery experts smartly re-introduced wolves into an ecosystem, an experienced financial planner can help you have a healthier and more productive portfolio. Give us a call when you ready discuss the balance of your portfolio and what mi