Baby-proofing the family finances

Too much company stock (and maybe travel) is keeping the Grant's portfolio from going places.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Yuval Rosenberg, Money Magazine contributing write

Stephanie and Chad Grant, San Diego
The Grants
  • Goals
Get their finances in order before starting a family
Boost emergency savings
Diversify their retirement portfolio
  • Assets
$95,000 in retirement plans
$125,000 in other accounts
$8,500 in cash and savings
CDs & Money Market
MMA 0.39%
$10K MMA 0.35%
6 month CD 0.35%
1 yr CD 0.67%
5 yr CD 1.38%

Find personalized rates:

Rates provided by

(Money Magazine) -- After seven years of marriage, Stephanie and Chad Grant are about ready to start a family. Before they do, the 31-year-olds want to baby-proof their finances.

That means dialing down risk in their company-stock-laden portfolio and in general "balancing our investments to meet short- and long-term goals," says Stephanie. The couple also need a savings plan.

It's not as if the Grants don't sock away money now. Stephanie, in public relations, and Chad, a biomedical engineer, have more than $200,000 invested in a mix of retirement and taxable accounts.

But they have just $8,500 set aside in cash for emergencies. The Grants don't spend lavishly on day-to-day items, but they do devote $20,000 or so a year to travel. They know that will have to change once they have kids.

The solution

1. Sell company stock. More than half their portfolio is in Chad's company stock and options. That's especially risky since he works for a small medical-device firm. Financial adviser Jon Beyrer in Solana Beach, Calif., tells the Grants to trim this by $88,000, bringing their exposure below 20%.

2. Create a cash plan. Use some of the stock-sale proceeds to build a six-month emergency fund. A quarter of the $48,000 they need belongs in a savings account; the rest can go into a safe bond fund. They should also keep cash in separate accounts, so they'll never pay for travel with money set aside for emergencies or planned expenses.

3. Fix their mix. Because of their heavy dose of employer stock, the Grants' portfolio is concentrated in small-cap U.S. shares. To diversify, they need to boost their stake in bonds and foreign stock funds.

Want a Money Makeover? E-mail us at To top of page

Send feedback to Money Magazine
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More
7 businesses Amazon wants to shake up From industrial supplies to educational software, Amazon is about more than just retail and books. More
Don't miss these Tax Day deals From massages and paper shredding to cookies and queso, celebrate the end of tax season with these Tax Day freebies and discounts. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.