Investment Philosophy

We believe that the best way to achieve long-term investment goals is to build and maintain a globally diversified portfolio of low-cost index funds and/or index ETFs with a level of risk appropriate for your personal situation.

Four main factors drive investor success: diversification, asset allocation, expenses and taxes. Nobody can control the financial markets, so investors should concentrate on the things they can control. An investor can determine the allocation of the portfolio, make sure that it is diversified  and minimize the performance drag of expenses and taxes by choosing the lowest-cost and most tax-efficient funds.

Diversification is the cornerstone of any successful investment plan. By using a combination of different types of investments, an investor can reduce the volatility (risk) of their portfolio without sacrificing performance. To achieve proper diversification we employ a technique called asset allocation, which is the process of dividing a portfolio into major asset classes and sub-classes to arrive at a mix best suited to achieve the desired combination of risk and return. Numerous studies have shown that portfolio performance is based mostly on the asset allocation decision.

Selecting the best investments to represent each target area is also important, especially in regards to minimizing expenses and taxes. The portfolios we recommend are comprised mainly of index funds and ETFs. Putting just a few of these funds together in a portfolio effectively allows you to own the entire stock, bond and real estate markets. This market-matching strategy allows an investor to share in the growth in the capital markets over time.

Keep in mind that the future is uncertain so portfolios should have sufficient liquidity and flexibility to deal with changes that may occur. For this reason we do not like products or services with penalties that prevent or inhibit you from making changes as needed. Our goal-based philosophy also leads us to avoid speculative investments or seeking short-term gains.

The best way to design and implement the portfolio is to do it yourself with the assistance of a fee-for-service advisor rather than using a full-time money manager or retainer advisor. We can help you implement a self-directed portfolio at Vanguard, Fidelity, Schwab or any discount broker of your choosing, so that you enjoy worry-free and nearly effortless investing.

If you think this sounds like a smarter way to manage your money, please give us a call to arrange a free initial meeting so we can answer all of your questions about our philosophy, methodology, services and fees.