My Investment Principles

While investing is only a small part of a holistic financial plan, it is often focused on the most by many people. Here is a list of some of my investment principles to give you some insight on how I think about investment advice throughout the financial planning process.

Passive investing beats active investment - Decades of research show that, over the short and long term, passive strategies outperform nearly all active strategies. The majority of actively managed funds underperform their passive benchmarks, and this effect gets stronger the longer the time frame. Over a 10 year time-frame, nearly all actively managed funds underperform their passive counterparts.

Simplicity above all else - Straightforward strategies are easier to understand, easier to follow, and more likely to succeed than complex ones.

Time in the market beats timing the market - Staying invested for the long term is more effective than trying to predict market movements. Consistency and patience are key to successful investing. Missing the market's best days are hugely detrimental to your long term returns, and the best market days are impossible to predict accurately and consistently, often happening during periods where the market is going down.

Evidence over emotion - Investment decisions should be based on academic research and empirical data rather than market speculation, trends, or fear-driven reactions.

Don’t believe everything you hear - Markets generate endless commentary and predictions, but most of it is noise. Sound investing relies on evidence, not headlines.

This time is NOT different - Market downturns are a normal part of investing. From 2001 to 2008 to the COVID crash, history shows recoveries follow even the steepest declines. Investment plans are designed to ride out volatility and support long-term goals. A common phrase we hear is "this time is different," I assure you, this time is NOT different.

Behavioral coaching is crucial - Investors are often their own worst enemies, making emotional decisions based on short-term market movements. A key role of a financial planner is to provide guidance and discipline during periods of market volatility. Doing nothing is sometimes the hardest thing an investor can do, but also the most important.

Markets are generally efficient - While anomalies exist, attempting to consistently outguess the market through stock-picking or market timing is a losing game. Focus on capturing market returns through broad diversification.

Minimize costs - Fees, expenses, and taxes erode returns over time. Prioritize low-cost investment solutions, such as index funds and ETFs, and implement tax-efficient strategies.

Asset allocation drives returns - The most important determinant of portfolio performance is asset allocation, not individual stock selection. A well-diversified portfolio should align with the client’s risk tolerance, goals, and time horizon.

Risk and return are related - Higher expected returns require taking on more risk, but risk should always be carefully assessed in the context of the client’s ability and willingness to bear it. High returns require high risk, but high risk does not always mean high returns. Risk management is key! Risk is not perfectly linear.

Diversification reduces risk - Spreading investments across asset classes, industries, and geographic regions minimizes the impact of individual asset volatility and improves long-term outcomes. Diversification is "the only free lunch" in investing.

A personalized plan is essential - There is no one-size-fits-all portfolio. Investment recommendations should be tailored to each client’s financial situation, objectives, values, and overall financial plan.

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