Balancing the risk and reward between investments helps you achieve your real-life financial goals.
Asset allocation and portfolio management provides you and your loved ones many benefits:
More than 90% of the variability of an investment portfolio is due to asset allocation. The average return for the SP500 index of equities is around 10% per year. In survey after survey, individual investors underperform their own investments. Morningstar’s annual study, Mind the Gap, says investors underperform by an average of 1.7% per year. In another recent survey from DALBAR, investors underperformed their own investments by 2.8% or more! How can that be?
Carefully set your long-term investment objectives. Then, plan your investments. Determine your time horizon and risk approach. Build your investment portfolio. The first step in this process is asset allocation.
Asset allocation is the process of deciding how much of your portfolio to invest in different investment types, or asset classes. The most basic asset allocation choice is between equities and fixed income, also known as stocks and bonds. A proper asset allocation may include short-term investments, foreign equities and bonds, and alternative assets. The assets you invest in have a large effect on your long-term, total return.
Once you have determined your asset allocation, the next step is to select the investment strategies. Our investment philosophy document describes how those investment management decisions are made, the processes, and the people behind the scenes. Your investment team will manage the risk and return, periodically rebalance these investments, and keep your money invested in alignment with your goals and values.
You are now ready to build a diversified, high-conviction portfolio based on your individual goals and needs. To do this, we use the latest in academic investment research and the work of outside research teams. Ask your financial advisor for more information or download our investment philosophy.
Begin with:
As Helen approached her 90s, she knew her money would outlast her life on earth. Her oldest grandchildren were having children. Her youngest grandchildren were approaching college age. Helen wanted to provide them a college education, and she didn’t mind saving taxes either. But she wanted to do something fair to help all the different generations, and also give a little more to those who needed a little more. We:
Discussed fairness, and what it means to Helen, and helped her feel confident in her decision
Set up education accounts and trusts
Funded them in a manner that helped Helen save on taxes
Kept things simple and elegant
Managed the assets prudently
Helen recently passed away. She is remembered by her family for her elegance, prudence and generosity. Her children, grandchildren and great-grandchildren are all a little better off, financially and otherwise, because of her good decisions.
Uncle James passed away a few years after becoming our client. Because James never had children, he left the assets in trust for his three nieces. While the children grew up, we managed the investments and their father kept their inheritance a secret. When they were college-bound, James’ nieces received a pleasant surprise—college was free, thanks to Uncle James! We:
Set up and help James fund the trusts, making it easy for James
Managed the investments prudently with Uncle James’ goals in mind, making it easy for the trustee
Managed and reduced tax costs
The accounts continued to grow, even after paying for college. James’ oldest niece was able to pay for a wedding and make a down payment on her first home. Uncle James’ generosity will be forever remembered by this family.
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Our financial advisors can meet with you at our Lone Tree office or any location in the greater Denver area including Greenwood Village, Littleton, Centennial or Englewood.
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