Cliff Swatner is single, 33, and owns a condo in New York worth $250,000. Cliff is an attorney and doing well financially. His income last year exceeded $90,000, and he has sufficient liquid assets to supplement his condominium and other tangible assets. Several years ago, Cliff began investing in stocks and bonds. Some have worked well for Cliff, but others have not. Cliff has never evaluated his portfolio performance, but he feels it isn’t good. Cliff currently has about $90,000 invested. He has been dating a woman lately and hopes to marry her in three years, at that time he will need $20,000 for marriage expenses and a honeymoon. Cliff’s only other objective is to accumulate funds for retirement, but he does not have a specific dollar target for it. Explain some disadvantages of Cliff’s current investment approach.

Construct a portfolio for Cliff, limiting your selections to mutual funds (assume he sells his stock and bond holdings). Make sure your plan indicates specific dollar amounts for each portfolio component. Make sure your plan also explains your selections for each portfolio component.

Explain how Cliff should periodically rebalance his portfolio, indicating how frequently rebalancing should be done.