Wealthy Families
For those families fortunate enough to be managing significant wealth, the world of investment advisors is familiar. The investment advisor is a trusted helper, complementing a team that includes accountants, attorneys, real estate agents, and other experts. You may have been working with your current advisor for decades, and any transition would cause hurt feelings at the least.
Your concerns are valid
Yet, you have a problem: you are skeptical of the advice your receiving (or pehaps you are being ignored). Either way, you have a responsibility to look after your family’s interests, and inaction is no longer palatable.
Signs you are receiving bad advice
If your current advisor has you doing any of the following things in the equity portion of your portfolio, you should know that your chances of underperforming the market are substantial and have tangible long term consequences for you and your heirs:
- Buying individual stocks unless you have AT LEAST 100 different stocks. Note that this is 100 stocks per asset class, so to effectively diversify across the small/large and value/growth spectrum in the US alone you’d want 400 stocks.
- Buying any single stock based on anyone’s advice that the stock will outperform. There is extensive proof that no one can predict the movements of stock prices.
- Paying short term capital gains tax due to buying/selling within 1 year
- Not having significant money internationally, including stocks AND bonds. Most investors participate in international equities, but have little or no foreign fixed-income holdings. This hurts returns.
Cut costs during inflationary times
Inflation is having a significant impact on portfolios today, reducing their value in real terms, and consequently reducing the purchasing power of investment income. Strategies that cut costs and eliminate middle-men are a critical part of ensuring that your portfolio grows in real terms.
Much of the website’s content is tilted towards equity vs fixed income strategies. This is because improvements to fixed income investments generally require little more than cutting out fees while continuing to execute a proper fixed income strategy.
Laddered Bond Portfolios
Ross Asset Advisors can help in the construction of both simple and complicated bond portfolios. Simpler portfolios will be built using a handful of diversified bond funds. More complicated is to include laddered bonds suitable for the creation of stable income streams. Although these investments take time and expertise to set up, they do not require much maintenance.
Note that laddered bond portfolios are not considered “index investing” because they involve the purchase of individual bonds. Risk is not a concern for federal bonds, and as long as attention is paid to the characteristics of municipal bonds, risk can be substantially mitigated there as well. RAA will generally want to discuss your tax strategy with you or your accountant prior to finalizing our approach.
Please enjoy the rest of the website, and Contact Us when you are ready to discuss making a positive change to your investment strategy.
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