Investing
As savvy investors recognize:
- The majority of the return generated in investment portfolios tends to be the result of asset allocation rather than stock picking.1
- Diversification through asset allocation among a variety of asset categories offers the potential to limit losses and reduce fluctuations of investment returns without sacrificing too much potential gain.
- Investments with low expenses tend to outperform similar investments that have high expenses. It is very difficult for investments that have high expenses, including the management fee, to overcome the performance lag they have relative to similar investments with average or low expenses.
- Taking a long-term approach to investing, rather than trying to be a market timer or a fad chaser, is the more prudent way to grow wealth.
These four points serve as the primary guidelines CPAIS follows in helping clients create and manage their investment portfolios.
Setting Your Investment Strategy
Once we have determined your financial objectives, investment time horizon and risk tolerance, we will help create or refine your investment portfolio. Among the first asset allocation decisions we make will be to determine what we believe to be your optimal and prudent exposure to:
- Equities vs. fixed income securities
- Domestic vs. foreign equities
- Large, mid and small cap stocks
- Alternative asset classes, which may include real estate, commodities, hedge funds or structured investment products.
1 Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, “Determinants of Portfolio Performance,” Financial Analysts Journal, January-February 1995: 133-138; Roger G. Ibbotson and Paul D. Kaplan, “Does Asset Allocation Explain 40, 90, or 100 Percent of Performance?” Financial Analysts Journal, January-February 2002: 26-33