Do You Know What Money Management Options Are Available to You?
Today, there are many investing options available and literally thousands of products, which can be daunting. How do you choose which is best for you? After cutting through the noise, there are essentially six general investing methods, each with its own benefits and drawbacks.
Whether you decide to self-manage, hire a broker or financial planner, buy mutual funds, open a wrap account, invest in hedge funds, or hire a private portfolio manager, the decision will hinge on:
- Who do you want making investing decisions for you?
- What kind of investing strategy is most appropriate for you?
- What fee structure do you prefer, and how transparent do you want it to be?
- What level of custom-tailoring and service do you require?
The following PDF file can help you understand your options as you make this decision. (Industry Overview Options)
RISK TOLERANCE AND ASSET ALLOCATION:
We believe that investment returns are determined principally by risk, and that a diversified portfolio’s expected return is a result of its exposure to certain risk market-based factors. Since a portfolio’s asset allocation determines its risk factor exposure, how to allocate one’s assets is one of the most important decisions an investor can make. We spend significant time with our clients helping them analyze and create appropriate asset allocation policies, which is largely about selecting an appropriate risk factor exposure.
DIVERSIFICATION:
Successful investing means not only capturing risks that generate expected return but also reducing risks that do not. Avoidable risks include holding too few securities, betting on individual countries, industries, or sectors, following market predictions, and speculating on buy or sell recommendations from securities analysts.
Diversification is the antidote to all of these potentially damaging mistakes. Diversification helps to minimize the random outcomes of individual stocks, and positions your portfolio to capture the returns of broad economic forces.
The above image is known as the efficient frontier. It is the curve on a risk-reward graph comprised of all efficient portfolios. One portfolio is theoretically more efficient than another if it is closer to the frontier line. The appropriateness of where your allocation should appear is a decision you and your advisor make based on your needs and feelings about risk.
What is most important to you about money? After understanding your objectives and establishing a plan with various financial professionals, we can help you make smart investment decisions. How can we help you?
Feel free to talk with a satisfied client residing in the San Francisco Bay Area. Our clients include professional executives, small businesses, successful entrepreneurs, retired professionals and more.
