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Investment Planning

Our investment approach is guided by three core beliefs that dictate three strategic actions.

  • Our core beliefs are
    1. Faith in the future: We believe things are going to get better, and companies are going to find a way to grow, in any market condition.
    2. Patience: Growth will not happen in a straight line, there will be ups and downs.
    3. Discipline: We need to have the discipline to stick to our plan and not do anything fearful or greedy during times of turmoil. When discipline fails, the plan fails.
  • These core beliefs lead to 3 actions:
    1. Asset Allocation: We will choose a mix of stocks, bonds, alternatives, and cash in a portfolio that balance your need for return and stability. This is a significant determinant of portfolio performance.
    2. Diversification: This means spreading risk and reward within an asset class. In its simplest form, it means never owning enough of one thing to make a killing in it, or to risk getting killed by it.
    3. Rebalance: This means taking the portfolio back to its your long-term composition at regular intervals. This helps ensure your portfolio remains compatible with your goals and risk tolerance. 

Our firm specializes in helping individuals and families develop sound retirement plans. If you are retired – or approaching retirement – please take the time to explore our website and the wealth of information we offer.  We offer customized, hands-on service.  We educate our clients about financial concepts and strategies, taking the mystery out of investing, insurance, estate conservation, and preserving wealth.  We understand the many challenges of retirement today and know the biggest concern for many is outliving their money.  Some of the investment management tools we use to facilitate this include:

  • Individual Retirement Accounts (IRA): The majority of our clients invest in at least one type of IRA, either ROTH or Traditional. IRA’s offer some advantages over other accounts.  For starters, they allow us to either defer taxes until retirement with a traditional IRA or pay the taxes now and have tax free growth until retirement.  In addition, your IRA is solely yours, which means you do not have to go through an employer, and you can even roll one of your old retirement plans such as a 401k, 403b or an old IRA into your current IRA.  Finally, IRAs are flexible and easy to set up.  Your investment options are not limited to those provided by your employer, which means we can select the investments that are best for you, not just the ones your employer gives you access to.
  • Employer Retirement Plans: While some of our clients are still working, we help provide education on how best to handle all of their investments, this includes employer retirement plans such as 401ks, Solok, 403b, 457, SEP IRA, SIMPLE IRAs and more.  While IRA’s offer more flexibility, they also have some tradeoffs.  There are strict income limits and contribution limits that change every year, meaning not everyone can get the full benefit from investing in an IRA. Even if they can, there are many benefits an employer retirement plan can give above and beyond an IRA.  These benefits include, matching contributions, higher contribution limits, more lenient income limitations, direct payroll contribution and more.  If you own your own business, there are opportunities to create a retirement plan for your business to ensure you are taken care of.  Ask us about our small business retirement plans.
  • Taxable Accounts: While there are important benefits to tax advantaged accounts, there are also advantages to taxable, non-qualified accounts.  These accounts include, individual investment account, joint investment accounts, trust investment accounts, brokerage accounts, managed accounts and more.  These accounts often lack tax advantaged status but make up for that in a few ways.  There are no upper limits on how much can be invested, meaning our clients can invest as much as they want, when they want.  In addition, there are no early withdraw penalties, as is the case with many of the case with many of the retirement accounts.  Despite being a taxable account, there are strategies to mitigate taxes. This can be done through tax managed funds, municipal bonds, tax loss harvesting and more.
  • Insurance and Annuities: No plan would be complete without discussing risk planning. Some of the tools we use are Long Term Care Insurance, Variable Annuities, Fixed annuities, Disability Income Insurance and Term life insurance.  Everyone’s situation is different, however as a general rule, we like to advise our clients to insure against disaster and have an emergency fund to cover the small stuff.  Some disasters that can be covered with insurance include a health event, disability, longevity risk, sequence of return risk and dying too early.  We discuss with our clients which of these they are able to self-insure, and which risks they would prefer to pay someone else to take.
  • Planning for the next generation: Many of our clients want to leave a legacy. Some of the ways he can help them is by funding a 529 to help their children, or grandchildren attend college, or through a Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act(UTMA).

There are many resources and account types available for us to use, we strive to help our clients select the right investments and account types for them, and their goals.

Frequently Asked Questions About Investing

  • What should I invest in?
    • We help our clients invest in an asset allocated, diversified portfolio that is periodically rebalanced. The intent is to provide as much return for our clients, considering the amount of risk they are willing to take. 
  • What should I do with extra money I don’t need right now?
    • Typically, we advise our clients with the following hierarchy, assuming they are able to meet basic needs, 1. Build an emergency fund of at least $1,000. 2. If you have an employer retirement plan, such as a 401k, invest at least enough to get the match. 3. Pay down any high interest debt.  4. Build an emergency fund of 3-6 months living expenses. 5. Pay down remaining debt, possibly excluding mortgage 6. Evaluate the merits of the retirement plans that are available, target around 10-15% of your income towards retirement. 7. Evaluate expected short term expenses, such as new car, home down payment or wedding.  Save as appropriate. 
    • From here it is hard to generalize, some good things to look into include HSA’s, contribute more to retirement plans, starting your own retirement plan, non-qualified investments, saving for longer term goals, gifting to charity and much more.
  • What is modern portfolio theory?
    • Modern portfolio theory is simply trying to get as much return as possible, while keeping the risk within an acceptable range. This typically involves a balance of higher risk/higher return investments and lower risk/lower return investments. This balance is called asset allocation.  It also calls for many different investments within each asset class, this is called diversification.
  • What is asset allocation?
    • Asset allocation is the percentage of your portfolio that is allocated to each asset class. Your asset allocation will be the primary factor in how much risk and return you expect in the long term. The asset classes we use on a regular basis include, Large U.S. Companies, Medium U.S., Small U.S., International Developed, International emerging, real estate, commodities, municipal bonds, corporate bonds, government debt and cash. This list is not exhaustive, and each asset class can be broken down further.
  • What is diversification in investing?
    • Diversification is having multiple companies within each asset class. For example, within the asset class “Large U.S. Companies'' we would not just have 1-2 companies, but hundreds or even thousands.  This means if one or two of these companies does poorly, it will not destroy our portfolio.
  • How do I diversify my investments?
    • The easiest way to diversify is with the use of mutual funds or ETFs.  With the purchase of a single fund, you could invest in every publicly traded U.S. company.  We typically would use a separate fund or two for each asset class, it will allow us more control and flexibility while maintaining simplicity.
  • What does rebalance mean?
    • Different asset classes will have different returns at different times, for different reasons.  Rebalancing means we will periodically and automatically sell the investments that are high, to buy those that are lower.  This takes the emotion out of investing.  It can feel weird to “sell winners, and buy losers”, but the losers of yesterday are often the winners of tomorrow. And we are getting to buy them at a discount.
  • How do I avoid big investment mistakes?
    • There are 2 big investment mistakes we see repeatedly.  Fear and Greed.  They are two sides of the same coin. Fear is seeing your portfolio drop more than you can handle, then selling some or all your investments because you can’t handle any more loss.  Greed is watching the market to bounce back, get double digit returns, reach all-time highs and then you get greedy and want to get some of those returns. We can avoid these mistakes by having a plan and sticking to it.

Disclosure: Neither asset allocation nor diversification assure or guarantee better performance and cannot eliminate the risk of investment losses.

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