Investing
As an independent firm, we are not owned by a bank or financial institution. We have the freedom to recommend strategies and investments that align with your needs, not a corporate sales agenda.
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We directly manage your portfolio, constructing strategies, placing trades, monitoring and adjusting, always with the full resources of LPL behind us.
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To educate you on what's really going on, and our choices unfolding as a result, I’m always sharing what I learned on Wall Street. We offer you the opportunity to truly partner on the journey of investing your wealth, not least as your own life changes.
Risk Tolerance
We believe a fundamental benefit of having wealth should be the ability to sleep at night. It is essential that we determine the amount of risk you can accept, whilst still seeking to obtain the returns you want.
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When we create a portfolio tailored to your growth expectations, we check,
check and over time check again, that it’s also providing you with what you
personally need to maintain a basic peace of mind.
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The first stage is to ensure you have enough money in ready cash to
maintain your lifestyle for one year, in the event things go wrong.
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The second move is to determine what your appropriate split between
stocks and bonds should be.
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History teaches us that the stock market always goes up over time. But a
fall of 20% or more occurs roughly once every 6–7 years, the timing and
severity of which are obviously unpredictable.
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Traditionally bonds have acted act as a brake on the decline of the overall
portfolio. Their prices tend to be more stable than stocks. So if you need to
sell anything to raise income, they would be preferable to the more severe
possibility that you could be a forced seller of stocks at depressed prices.
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The Trade-Off Between Stocks and Bonds
Stocks provide higher growth but more volatility, making them best for long-term goals. Bonds offer
steadier returns, often suited to medium-term needs or retirement income.
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As you know, stocks are a small slice of ownership in a company. Their price on
the stock market can swing wildly in the short term. But along with their higher risk,
they offer higher potential returns. Historically, stocks have outpaced inflation and
wages over the long term. Often significantly more than other asset classes.
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Stocks are generally suited to long-term goals, like retirement, where you have
time to ride out market ups and downs. They may not be the best fit for short-term
needs where stability is more important. Like saving to buy a home.
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Bonds on the other hand are loans to companies and governments. Bonds usually
pay interest and return your original investment at maturity, provided the issuer can
meet its obligations. Their prices therefore tend not to be as volatile, offering more
consistent, moderate overall returns. They may be a better fit for medium-term
goals, like funding college, or for investors approaching retirement who want less
exposure to stock market swings, while still maintaining growth potential.
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Our role is to help you determine an asset mix appropriate to your goals, time
horizon, and circumstances. Many investors are familiar with the traditional 60/40
stock-to-bond split. But what’s appropriate for any one client varies with age,
security of other income, proximity to retirement, the size of their portfolio and many other factors.
Time Horizon
How long your money can remain invested is one of the most important factors in building a portfolio.
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A longer time horizon allows you to weather short-term market swings and take advantage
of higher-growth investments, like stocks. With more years ahead, there’s a greater
opportunity for the ups and downs of the market to even out, and for compounding to work
in your favor. Whilst past performance is no guarantee of future returns, the chart below
from LPL research, using 75 years of data, shows there is 92% probability of making
gains in the S&P 500 if you leave your money in it for 10 years.
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For shorter-term goals, stability becomes more important. If you’ll need your money in just
a few years, say for a home purchase or tuition, conservative investments like bonds or
cash may be a better fit.
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Your time horizon directly shapes your asset mix: longer horizons can support more
growth, while shorter horizons typically call for greater stability.
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Do I Have Enough to Get Through Retirement?
What you need to save to reach your objectives:
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