Our first step (with a new client) is to work closely in order to understand his or her goals. We discuss cash flow needs and their comfort level with risk. We discuss historical performance using various asset allocations. We complete retirement projections with multiple scenarios (collaboratively with the client). We then determine an appropriate asset allocation, prepare an investment policy statement, and review our recommendations for the investment portfolio with each client.
For the fixed income portion of the portfolio, we often use bond ladders for our clients who are retired, or are within 10 years of retirement. The bond ladders provide an important element of safety to the portfolio, and are structured to provide the necessary cash flow each year that we have estimated after reviewing living expenses, sources of income, and other variables. We also use CDs, money market, and bond funds for the fixed income portion of the portfolio, depending on each client’s situation. When the stock market is in turmoil (such as years 2000 – 2002, and late 2008 – early 2009), the bond ladders and bond funds within our clients’ portfolios provided valuable stability.
We believe that no one can predict the performance of the financial markets in the near future. However, history suggests that over the long term the financial markets should continue to grow. We focus on helping clients achieve their goals, and on long-term investment results.