INVESTMENT MANAGEMENT
How We Invest and Manage Money
The prudent money management program is a combination of 4 investment strategies.
- Core Investments Strategy – These are longer-term investments that provide a foundation for the overall investment strategy. They are selected for their ability to manage for investment risk as well as investment growth. They are also selected for the consistency in their approach.
- Flex Investment Strategy – Market conditions change. Risk levels change. Thus, your investment strategy should change with the market. If we were heading to a bear market, your investments should make that shift to protect and provide growth even in the midst of a bear market. This part of the overall strategy does just that.
- Style Category – Part of the investment strategy just focuses on the investment style that is currently working. Click here and you will see that each year the top places to be invested change. For example, some years you will see small cap value as the best investment style to use and in others years, it might be medium cap growth style. We attempt to stick with the styles that are working that year and stay flexible.
- Cash/Bonds/Fixed Investments – There is always a place for bonds for the ultra conservative investor. However, keep in mind that bonds can lose money. As a result, any bond strategy has to be carefully invested and monitored.
In my initial meeting with each prospective client, I evaluate if this approach is appropriate and suitable for their situation based on risk level and life circumstances.
My Thoughts on Taking Risk
You take risk to make your money work harder. Money has to grow over time in order to take care of future financial goals. It would be nice to have millions of dollars in the bank sitting in United States Treasury Bonds, taking no risk. If you had that kind of money, you wouldn’t need to take risk. Unfortunately, the average individual in America doesn’t have that luxury. Therefore, you have to make your money work harder.
I look at risk much differently than most people who manage money.
First, I invest to protect clients from the large losses that can occur because of risk. Most investment strategies do not incorporate strategies to manage for risk. I think that managing for risk is just as important as investing to grow your investments. Fortunately, this proved to be successful during the 2008 bear market.
Second, I define risk as a loss of investment value AND a loss of time. Time is a critical component of risk. For most investors, the recent bear market has taken away 10 to 12 years of investment growth. Although the loss of investment growth is a tough one, losing the 10 to 12 years is much more damaging to future goals.
Third, I only take risk that my clients can afford to take. You always have to look at the worst case scenario by answering the following question. If I take this risk and I lose money, can I make that money back quickly? If you cannot answer that question with a yes, you do not take the risk.
If you want to consider becoming a client or just want more information, there are several ways in which we can help you. If you want to consider becoming a client or just want more information, there are several ways in which we can help you. To inquire for more information, start by contacting the office and talking to one of our team members at 972-386-0384 ext 202 or feel free to send me an e-mail by clicking here.