While meeting with a new
client yesterday and explaining our investment process, I thought about the
basic keys which I have learned in over fifteen years of helping clients invest
their assets which are as follows:
1.) Having a disciplined
written investment plan and process, that is regularly monitored and properly
managed, is much more important than the individual investments you select to
implement your plan. In general, it is
my experience that people spend far to much time worrying about which stock or
mutual fund to buy or sell and they do not even have a written and monitored
plan to evaluate whether these investments are doing what they are supposed to.
2.) All investments can have
good times and bad which is why it is not worth spending so much time selecting
the individual investments which make up your portfolio. Sure, you want to make sure that the
individual investments have low expenses, have historically done what they say
they are going to and are run by reputable firms with established long term
track records, however, as mentioned above, it is more important to have a
disciplined process for managing and monitoring the portfolio as a whole than
the individual investments themselves.
3.) Diversification and
rebalancing are the keys to reducing portfolio risk (although diversification does not guarantee against loss; it is a
method used to help manage risk). To
many investors are over concentrated in their investment portfolios to one or
only a few asset classes or investment styles, and do not rebalance their portfolios
regularly.
White House Financial
& Settlement Consulting helps families live easier and less stressful lives
through the proper management of their financial resources. We do this by acting as our clients’ trusted
advisor providing a personal touch customized to the client’s needs! Please visit our web site at www.whitehousellc.com
for more information!