In a successful partnership, the alignment of philosophies between parties is non-negotiable. Our way is not the only way, but we are unwavering on certain themes. Our clients must believe in the way we're investing for them, or else they won't stick with it, and worse, will result in poor outcomes.
- Investor behavior is the single biggest contributor to successful outcomes. The difference between a great investor and a poor investor is typically not knowledge, but disposition. The great investor stays consistent when things get hard. They show humility. They do not react to an event outside of their control.
- Less is more. Simple is better. Cost matters. Taxes matter.
- Evidence-based decision-making and implementation.
- Have an appreciation of the relationship between risk and return. If you want higher returns, you typically need to take on more risk. No magic bullets.
- A realization that future outcomes are uncertain, thus more discussion of probability and contingency as it relates to how money is invested.
That all said, in my opinion, investing is virtually inseparable from broader planning. From the great Nick Murray (via Simple Wealth Inevitable Wealth):
"A portfolio is not, in and of itself, a plan. And a portfolio that isn’t in service to a plan is just a form of speculation; it can have no other goal than to beat most other people’s portfolios.
But “outperformance” isn’t a financial goal. An income you don’t outlive – to cite one critical example – is a financial goal. If your portfolio “outperforms” mine, such that I run out of money when I’m 76, and you don’t run out of money until you’re 82, it isn’t going to matter much when we’re both 85, sitting on a park bench without two nickels to rub together between us.”
Riskalyze Analysis Tool
Investment adviser representative and registered representative of, and securities and investment advisory services offered through Voya Financial Advisors, Inc. (member SIPC).
