Helen and Jeff Brown make it look easy. The Browns, who live in Indianapolis, are dedicated savers and savvy investors. And thanks to their hard work, they are worth several million dollars.
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The Browns don’t typically buy individual stocks, and they tend to stick to mutual funds with strong records. Currently they have 60% of their assets in stocks and 40% in bonds and cash -- a fairly conventional allocation given their ages (Jeff is 52, and Helen is 50). More than half of the Browns’ stock money and one-fourth of their bond money is invested in index funds. Actively managed stock funds offered by Vanguard, American and Heartland round out their stock holdings; Pimco Total Return and Templeton Global Bond account for most of the rest of their bond holdings. “We’ve never made radical changes to our investment strategy, and we’ve never pulled out of the market,” says Jeff. About 60% of the Browns’ financial assets are in tax-favored retirement and college-savings accounts.
The Browns have also been disciplined savers. Helen says that even right out of college, when she sold computers for IBM, she saved 35% of her take-home pay. “I knew people who were buying BMWs and Rolexes,” she says. “But I kept my savings plan in place by buying my Altima and just living within my means.” Today, the couple save 33% of Jeff’s pretax pay (now that they have three school-age children, Helen no longer works outside the home), and at the end of each month they sweep any remaining funds from their checking accounts into their investment accounts. Says Jeff, “I never feel as if we have extra money to spend.”
The Browns are well organized. Jeff, who is a corporate lawyer, spends about 30 hours a month tracking the family’s assets, debts and investments on Excel spreadsheets. His aim is to make sure that they’re getting the most out of their tax-privileged retirement and college-savings accounts, and to stay on top of their asset allocation. In his spreadsheets, Jeff also tracks changes to the family’s net worth over time; it has more than doubled over the past four years. That’s in part due to the stock market’s strong performance since the 2007–09 bear market ended. The couple’s decision to stand pat as the market was cratering led to substantial losses, but it also left them in position to benefit from the remarkable rebound.
Although the Browns are mostly do-it-yourselfers, they meet with financial planner Susan Elser about once a year to discuss the family’s finances and big-picture ideas, such as whether it’s time to buy a new house, and whether the family’s asset allocation still makes sense. Last year, they considered investing in Florida real estate to take advantage of low prices. After hashing out the numbers with Elser, they ultimately decided they’d do better sticking with their existing plan.