What Is Tactical Allocation and Why Would I Use It?

The Center Contributed by: Center Investment Department


You’re probably familiar with strategic investing, picking the amounts of stocks, bonds, and cash that create the foundation of your portfolio. But you may also want to consider another layer of portfolio management.

Investors who overweight or underweight asset classes as perceived market opportunities arise are implementing a tactical allocation.

Typically, a tactical allocation overlays a strategic allocation to help reduce risk, increase returns, or both.

While we believe that the relationship of valuation between markets over long periods will be efficient and will correspond to fundamentals, we also know that over shorter periods, some markets may become overvalued and other asset classes will become undervalued. It makes sense at those times to use a tactical allocation strategy. When executed correctly, a somewhat modified asset allocation may offer better returns and less risk.[1]

A tactical asset allocation strategy can be either flexible or systematic.

With a flexible approach, an investor modifies his or her portfolio based on valuations of different markets or sectors (i.e. stock vs. bond markets). Systemic strategies are less discretionary and more model-based methods of uncovering market anomalies. Examples include trend following or relative strength models.

With a tactical allocation, keep in mind less can be more. Successful execution of these methods requires knowledge, discipline, and dedication. The Center utilizes tactical asset allocation decisions to supplement our strategic allocation when we identify a compelling opportunity. Our Investment Committee arrives at these decisions based on many factors considered during our monthly meetings.

Want to learn more? Reach out to your financial planner or a member of the Investment Department team to learn how The Center uses tactical allocation to manage your portfolio.

[1] All investing involves risk, and there is no assurance that this or any strategy will be profitable nor protect against loss.

Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to

High-deductible medical insurance plan? Try an HSA!

Josh Bitel Contributed by: Josh Bitel

With the first year of the new Tax Cuts and Job Act behind us, tax-efficient saving seems to be top of mind for many Americans. In a world of uncertainty, why not utilize a savings vehicle you can control to help with medical costs?



A Health Savings Account, or HSA, is available to anyone enrolled in a high-deductible health care plan. Many confuse an HSA with a Flex Spending Account or FSA – don’t make that mistake! A Health Savings Account is typically much more flexible and allows you to roll any unused funds over year to year, while a Flex Spending Account is a “use it or lose it” plan. 


Many employers who offer high-deductible plans will often contribute a certain amount to the employee’s HSA each year as an added benefit, somewhat like a 401k match. Dollars contributed to the account are pre-tax, and tax-deferred earnings accumulate. Funds withdrawn, if used for qualified medical expenses (including earnings), are tax-free.

The list of qualified medical expenses can be found at irs.gov; however, just to give you an idea, they include expenses to cover your deductible (not premiums), co-payments, prescription drugs, and various dental and vision care expenses.

As always, consult with your financial advisor, tax advisor, and health savings account institution to verify what expenses qualify. If you make a“non-qualified” withdrawal, you will pay taxes and a 20% penalty on the withdrawal amount. 



  • Must have a plan with a minimum deductible of $1,350

  • $3,500 contribution limit ($1,000 catch-up contribution for those 55 or older)

  • Maximum out-of-pocket expenses cannot exceed $6,750


  • Must have a plan with a minimum deductible of $2,700

  • $7,000 contribution limit ($1,000 catch-up contribution for those 55 or older)

  • Maximum out-of-pocket expenses cannot exceed $13,500


Once you reach age 65 and enroll in Medicare, you can no longer contribute to an HSA. However, funds can be withdrawn for any purpose, medical or not, and you will no longer be subject to the 20% penalty. The withdrawal will be included in taxable income, as with an IRA or 401k distribution. This can present a great planning opportunity for clients who may want to defer additional money, but have already maximized their 401k plans or IRAs for the year.

Although you have to wait longer to avoid the penalty than with a traditional retirement plan (age 59 ½), this investment vehicle could reduce taxable income in the year contributions were made, while earnings have the opportunity to grow tax-deferred and tax-free.  

As you can see, a Health Savings Account can be a great addition to an overall financial plan and should be considered if you are covered under a high-deductible health plan. No one likes medical expenses, but this vehicle can potentially soften their impact.

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

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Breaking the Mold of a Broke College Kid


This blog is contributed by the Center’s summer intern, Zach Gould, who is a senior at the University of South Carolina. He shares his take on how students can take charge of their finances:

Let’s face it, college students are notoriously broke. During the school year, I don’t have a job because I plan and budget so I can focus all my attention on school. That means, when summer rolls around, I work at least 40 hours a week for 10 weeks or more, which is what I’m doing at the Center this summer. While I’m working, I try not to spend much money. My goal is to save at least 80% of my summer earnings so I’ll have it to spend during the school year. Because who wants to eat cafeteria food for 9 months? And you have to have cash for dates, movies, and a very occasional trip to the bars (wink).  So, once school starts I see how much money I have left from summer and budget that over the 9 months that I’m in school. I also plan for extra spending in December because of the holidays. Can you tell one of my majors is finance?

It is not impossible to maintain a job during the school year. A lot of my friends work part-time while going to school and are, in many cases, more organized than me because they are forced to be. This also provides income during the school year, which if you are paying for college yourself, certainly is necessary. If you’re not paying for college out of pocket, it is simply more expendable income. But holding down a job while going to school does have drawbacks, like limiting your ability to be a part of a lot of clubs or teams. Either way, after three years of making ends meet on a college student budget, I've learned a few things.

This is what I’ve learned:

  1. Start saving early for spending money in college. You are on your own and expenses previously covered by your parents are now funded by you.
  2. Budget the money you make while working during summer so it can last you throughout the school year, especially if you don’t plan to have a job while in school.
  3. It is possible to work and attend school, which will give you more flexibility with income. You must, however, be very organized and limit your hours to make sure you are achieving social and academic balance as well.

I’ll head back to college in a month with most of my summer earnings in the bank. It takes budgeting and careful planning not to blow it before the end of the first semester, but I know the skills I’m using now will really pay off in May when I graduate and am truly on my own.

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Where Did It Go?

Do you find that you ever have too much month at the end of your money? Be honest, in the blink of an eye, extra money seems to vanish. For those still in their earnings years, one of the keys to accumulating wealth, thus achieving your financial objectives, is to stop the disappearing act. Transfer dollars from your monthly cash flow to your net worth statement by adding funds to your savings accounts, taxable investment accounts, and retirement accounts (such as employer sponsored 401k and 403b accounts) and IRA’s (Traditional or ROTH).  Another smart move is to use funds from your monthly cash flow to pay down debt … also improving your net worth statement.

Saving money and improving your overall financial position is easier said than done.  The truth is that saving money is more than simply a function of dollars and cents; it requires discipline and perseverance.  You may have heard the strategy of “paying yourself first”.  The most effective way to pay yourself first is to set up automatic savings programs.  The 401k (or other employer plan) is the best way to do this – but you can also establish similar automated savings plans with brokerage companies and financial institutions such as banks or credit unions.

Just as important, be intentional with your 2012 spending.  Rather than thinking in terms of a budget (which sounds a lot like dieting) – think about establishing a “spending plan” instead. Planning your expenses as best you can will help ensure that you spend money on the things that add value to your life and should help keep your money from mysteriously vanishing at the end of the month.

For a free resource to help track your cash flow email: Timothy.Wyman@CenterFinPlan.com

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

A Holiday Shopping Three-Step Challenge

If you’re like millions of Americans, one of your after Thanksgiving dinner activities tomorrow will be making your holiday shopping list and browsing the Black Friday savings deals that are published in advance.  Your excitement will build as you anticipate the first store door opening on Friday morning.  You will prepare to feel the adrenaline rush as you dash in for the best buys of the season.  You are ready to save!  Or are you?

For most of us, we feel a great sense of accomplishment in finding great deals during the holidays.  In fact, many of us will buy an item that isn’t even on our list because the deal is just too good to pass up.  So, are we actually saving or just spending?  Wouldn’t it be a better strategy to find good deals on those items actually on our list, and save the rest?

My three step challenge for you this Black Friday (and the entire holiday shopping season) is this:

  1. Make a list of those items you wish to buy for each person on your shopping list – before you leave home – and set a limit on what you can afford to spend.
  2. Find the best deals you can find on those items you have listed, but avoid buying additional items just because the deal is too good to pass up.
  3. If you find that you have money left over in your budget after your shopping list is completed, invest in yourself.  Put the extra dollars towards either a short-term savings goal (like a car) or a long-term savings goal (like retirement).  Add the cash to a savings account, investment account, or to your IRA or ROTH IRA (if you haven’t already contributed the maximum amount allowable this year).

Meeting the three step challenge will help you to cross of all of the items on your gift list, feel the accomplishment of finding great deals, and invest in yourself all at the same time!  So get ready, get set, and SAVE!