When it comes to Investment Planning, proper asset allocation and management are paramount, as asset allocation accounts for approximately 90% of long-term portfolio performance. The three main classes of assets are Equities (Stocks), Fixed Income (Bonds), and cash and its equivalents (Treasury bills, CDs, Money Market Accounts), each having varying levels of risks and returns. Broader asset classes include International Investments (Foreign Stock, Yankee Bonds, Eurodollar Bonds, Emerging Markets), Real Estate, Commodities, and Collectibles among others. Each asset class exposes you to unique risk-rewards and diversification trade-offs. Given your financial goals, risk tolerances, time horizon, and financial position, the proper allocation of invested assets is the key success factor in achieving your goals. However, more sophisticated investors with higher risk tolerances may have experience investing in more complex investment vehicles, which may be incorporated into the asset allocation and investment strategy.
While not discounting potential gains (or losses) by trying to capitalize on specific market fluctuations affecting certain industries or specific companies using technical or fundamental analysis, potential gains are often eroded or become losses from higher transaction costs, and unanticipated adverse tax consequences. Investment planning aims to achieve your financial planning goals based on sound investing principles, including asset management, while considering tax implications and cash flows. If you need to liquidate assets for a major purchase or life event, I will identify the best candidates in your asset portfolio, explain the affects, and adjust your plan accordingly. While having a solid understanding of how the stock and bond markets work is helpful, we'll let the analysts do their jobs. We will capitalize on proven investment strategies, optimized for tax consequences- another advantage of having your CPA as your financial planner.
Finally, asset allocation is NOT a 'set it and forget it' proposition. Annual or bi-annual asset allocation re-positioning may be necessary to adjust your portfolio to changing market conditions- changing interest rates, technological disruptions, new or repealed regulations, deviations from expected returns for specific asset classes, or planning changes due to a new addition to the family. My goal is to understand your values, goals, life situation, and time horizon(s), help determine your risk tolerance, and create the optimal asset-allocation as unique as you are, in the most a stress-free manner possible. RATES & QUALIFYING