Our investment management services design portfolios that are carefully constructed to help retirement investors reduce risk, improve returns, and create a reliable income stream.
There are three key principles we follow when designing retirement investment portfolios:
1.) Carefully Control Costs
A significant factor in investment returns is the cost of the investments in a portfolio: low-cost investments are expected to provide better net returns than high-cost investments.
We build our investment portfolios using ultra-low-cost funds whenever possible. This helps to improve the success rate of your retirement plan and reduce drag on your investment returns.
2.) Investment Management for Tax Efficiency
We employ multiple strategies that are designed to increase the tax efficiency of our clients’ portfolios.
These strategies include managing asset turnover, asset location, and tax-loss harvesting.
Every time an investment is bought or sold (i.e “turned over”), costs and potential tax liabilities are incurred, including hidden costs like bid-ask spreads. By managing asset turnover, we aim to protect returns, mitigate expenses, and avoid taxes.
Through strategic asset location, we optimize what investments are held in which type of account for each individual client. For example, less tax-efficient investments are held in tax-advantaged accounts while tax-efficient investments are held in non-tax-advantaged accounts. This strategy can lower the tax liability for a client as compared to a strategy that does not employ strategic asset location.
Tax-loss harvesting is the selling of securities that have incurred a loss to offset a capital gains tax liability. This strategy is typically employed to limit the recognition of short-term capital gains since they are generally taxed at a higher federal income tax rate than long-term capital gains. It is also a way to defer taxation of investment gains for clients whose income is too high to contribute to tax-deferred accounts.
3.) Optimize Asset Allocation
There are often asset classes that are trendy and popular. For example, crypto currencies, gold, etc. have, at times, been touted as the “next big thing.” Investments in these types of assets can often be inappropriate for well-designed retirement portfolios.
We do not chase trendy investments. We only invest in asset classes that:
- Have been proven through academic research to provide superior risk-adjusted returns
- Work well when invested together in a diversified portfolio (e.g. low and/or negative correlation to each other)
As a fiduciary, our job is to make investment decisions that are in your best interest. This means ignoring the daily headlines and sticking with evidence-based solutions.
Want to learn more about our investment management services for retirement?