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-
financialbenefits.com 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