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Guiding You to Financial Freedom

Investment Management

Just as investments should be diversified, so should your investment strategies.  In reality, the size of an investment portfolio can restrict the number of investment strategies used.  I believe that, if resources permit, a portfolio should include three strategies. 

Strategic Allocation:  

A strategic allocation will invest in various asset classes.  The target allocations in the different asset classes are based on factors like your risk tolerance, time horizon, and investment objectives.   As these factors change, the allocation can adjust to better align with the changes.  A strategic allocation is typically recommended as the foundation for your portfolio and should be considered a long-term core position in that case.  

Tactical Allocation:

A tactical allocation is generally more actively traded than a strategic allocation.  There are a number of reasons why changes might occur in a tactical portfolio.  Economic cycles in which some market sectors and industries perform better is one example.  Momentum, seasonality, and market sentiment are a few others.   I often use tactical strategies in an effort to enhance a portfolio's overall performance.  

Investing for Dividends: 

Dividends are a powerful contributor to wealth over time.  According to research from Morningstar and the Hartford Funds, "Going back to 1970, 84% of the total return of the S&P 500 can be attributed to reinvested dividends and the power of compounding".  Dividend paying stocks are not always in favor and in recent years investors have been drawn to the go-go returns of growth stocks at the expense of more value-oriented dividend paying stocks.  But I believe that a large account should consider the long-term benefits of dividend paying stocks.  I particularly favor those companies with a history of increasing their dividend payments to shareholders.  

Managing Portfolio Risk:

The fact is, any investing comes with a degree of risk.  Through risk profiling tools, we will attempt to identify a range of investment outcomes you are comfortable with.  But, even armed with these tools, there are no guarantees with investing.  

Managing the portfolio risk in your account can involve using tools like stop orders or hedging with options. These strategies come with their own caveats but, it you are willing to take the time to work with me to become familiar with them, employing options may help you feel more comfortable with your investments.