What are the secrets to building the picture perfect portfolio?

Don’t try to time the market!

Trying to perfectly time “the bottom” of a market correction is like trying to catch a falling knife an inch before it hits the ground. Sure it’s been done, but timing it perfectly is almost impossible, mostly luck, and the more you try the more likely you are to get hurt.

Instead…

Stick to the plan! Invest for the long-term.

“Buy low and sell high” seems like an easy concept to grasp but many investors make emotional decisions when it comes to their money and actually tend do the opposite!

How can we avoid this?

By working with an advisor who sets reasonable expectations.

We choose only high quality investments that we believe will perform well over the long-term and diversify portfolios through the use of multiple asset classes. Unfortunately, there is no way to eliminate portfolio volatility altogether while still achieving investment returns that can outpace inflation.

“The greater the risk the greater the reward” is very true when it comes to long-term investing. Generally speaking, a portfolio with a higher risk profile will provide the investor with a higher long-term annual return than a more conservative portfolio, but the fact of the matter is every individual has a different appetite when it comes to risk.

Perhaps the most important factor we consider while building your custom-tailored portfolio is the question of sleep. Will you be able to sleep at night with the way your money is invested?

The first step to resting easy is completing our cutting-edge risk assessment that pinpoints your exact comfort level when it comes to your investments. Remember, everyone is different and there are no right or wrong answers when it comes to your money.

The result of this assessment is a risk number between 1-100 that is unique to you. We use that number to create a portfolio that matches the exact risk level you selected. Before any trades are placed, we review the proposal and give you a probable range of fluctuations to show how much you can expect your portfolio to fluctuate within a 6 month time frame. If that doesn’t feel like you we can always make an adjustment to assure you feel at ease moving forward.

People tend to stick to their investment strategy when they understand what they own and why they own it. This is why we make investment education a top priority. No matter your level of investment experience we will work with you on an ongoing basis to ensure you understand and are comfortable with your personalized investment strategy.

Diversify.

If you’ve ever heard the old adage “Don’t put all of your eggs in one basket”, you understand the basic principle of diversification. Investing in different sectors of the market as well as a variety of different asset classes is a proven way to reduce portfolio volatility.

The Callan Periodic Table of Investment Returns shown here illustrates the annual returns for 9 different asset classes from 2002-2021. The top performing asset class is shown at the top of each column for the given year.

Notice how the same asset class is not the best or the worst performer year in and year out. While there were 9 years of the 20 shown where all 9 asset classes had a positive return for the year, there were 0 years in which all 9 asset classes had a negative return!

A similar table could be made with individual stocks or sectors of the market. An individual stock or sector may be a great investment, but that doesn’t mean it will outperform the market every year.

By diversifying portfolios among many different asset classes, market sectors, and individual companies with regular rebalancing, we are able to give you a smoother ride to your eventual investment goal.

Taxes… defer, deduct, destroy.

As of 6/23/22 according to the Public Law 117-154 the US Tax Code is 6,871 pages. Printed on standard .1mm thick printer paper it would be 27.05 inches tall. Do you have the time and the attention span to read a 2 foot tall book on tax laws and then re-read the updated version every year after to see what changes have been made?

The fact of the matter is there are hundreds if not thousands of possible deductions and loopholes that are completely legal according to the code and if you aren’t taking advantage of these you are paying more than your fair share. We help you to maximize your investment potential by minimizing your taxes to the extent the law allows.

How do we do this?

All investment accounts are not created equal. The U.S. tax code is built to incentivize people to save for retirement. There are a number of different retirement accounts that can allow you to deduct contributions from your personal tax return, your business taxes, or even both!

Qualified retirement accounts are also what’s considered “tax-deferred”, which means that no taxes are paid on capital gains or dividends in the year they occur unless a distribution is taken from the account.

By taking advantage of the proper qualified plans for your unique situation and using strategies like tax-loss harvesting, we are able to make your investment plan as efficient as possible.

So which type of account is best for you? That’s what we partner with your tax professional to find out.

The Right Investments for YOU

How do we decide which stocks, bonds, and funds to invest in?

There are approximately 2,500 companies listed on the NYSE and close to 4,000 listed on the NASDAQ. There are also about 8,000 mutual funds in the US, and about 8,500 ETFs globally.

We partner with Charles Schwab which allows us to offer the vast majority of these options to our clients but we are very selective about which of these we use to build the portfolio that is perfectly tailored to each client.

Using a combination of risk-reward analysis from Riskalyze and research from companies like Schwab, Credit Suisse, Morningstar, and more, we are able to narrow our focus to the investments we believe will give our clients the highest probability of reaching their financial goals.

While one particular stock or fund may be a great investment for one person, a number of factors could make the same investment completely inappropriate for another. There truly is no “one-size-fits-all” approach to investing and we believe that a custom-tailored approach is the only logical way to invest.