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Investment Returns: Your primary concerns are current and future income requirements. Our primary concern is ensuring that you do not outlive your financial resources. Your investment policy is designed around your income needs and allows for portfolio growth. Working together, we identify the best investment mix to meet your financial needs. The income component is designed to meet your current and future budget requirements without jeopardizing portfolio integrity. Principal growth is directed toward maintaining and increasing the purchasing power of your assets. To accomplish this, we use a total return approach.
Risk Tolerance: All investors have a level of risk tolerance that should be appropriately reflected in their investment portfolios. We view risk from the standpoint of the total portfolio, as opposed to each separate investment holding. Portfolio management techniques are used to blend various investment styles to produce a diversified portfolio, which is generally more resistant to market fluctuation. You'll have questions, and we want to answer them. We spend time with you to ensure that you fully understand the risk associated with your portfolio, so you can live with the fluctuations that frequently occur in the investment markets.
Portfolio Constraints: Many factors influence the design of your investment portfolio. These include taxes, time horizon for your investment, future additions or deletions, personal preferences, and legal and social issues. Other issues considered in portfolio design are large, single holding securities or the desire of a client to avoid certain industries or companies.
Modern Portfolio Theory
Modern Portfolio Theory (MPT) provides a means to evaluate and build an investment portfolio in terms of risk and historical returns of the investment classes. It can serve as a tool for comparing the return and risk characteristics of various investment choices. It provides insight into portfolio construction. By blending a combination of stocks and bonds in the same portfolio, it is possible to increase the return and decrease the risk of the portfolio or to maintain returns but decrease risk. Stocks and bonds do not move in perfect sync with each other, nor do the foreign markets and our domestic stock market. This concept is correlation and is the heart of Modern Portfolio Theory. Just as stocks and bonds are affected differently by the same economic information, the economies of different nations behave independently of one another to a certain degree.
Return: Generally, the long-term total return realized by your portfolio will be governed by the types of securities you invest in, such as stocks and bonds. The percentages of the various assets is commonly referred to as asset allocation. The asset allocation selection in your portfolio is the primary driver for long-term returns and short-term volatility. Studies have shown that as much as 90-95% of the portfolio returns are due to asset class selection. Total portfolio return includes both the growth of the investment and any income stream generated from it.
Risk: In investment management, risk is how much a portfolio varies up or down, on average, over a given period of time.
An inherent trade off exists between risk and return. The greater the risk, the greater potential for higher returns, but also for losses. Our primary concern is to find an appropriate investment mix for your individual situation.
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