Financial Planning Approach & Principles
This Isn't Magic
Nothing about investing or building wealth is truly difficult. I’ll admit, some topics can be overwhelming at first, but it’s nothing that you can’t handle with some guidance. People who try to convince you that this stuff is too difficult may be trying to sell you a product solution that only they can provide.
Low-Cost Passive Funds
I’m not smart enough or lucky enough to consistently pick the winning stocks and beat the market. Could I get lucky a few times? Maybe. Should we build a financial future based on luck? Absolutely not. I believe in using passive, low-cost, tax-efficient funds/ETFs. I use these for my own personal investing.
Asset Allocation
When it comes to the appropriate mix of stocks, bonds, cash, and other assets, every situation is unique. I’ll recommend specific investments for different accounts based on your circumstances. Asset allocation and asset location are two of the key tasks we’ll tackle together. We’ll explore your risk tolerance, risk capacity, tax bracket, time horizon, family dynamics, values, and goals before structuring your portfolio.
Individual Stock Picking
I don’t believe that individual stock picking is the best path to financial success for the vast majority of people. This doesn't mean that I think it's horrible and should never be done. I just don't recommend this as a primary strategy. If you truly enjoy picking stocks, we can create a plan that still incorporates this.
Simplicity
Building wealth and reaching financial freedom does not have to be overly complex. Some people approach investing with the mindset that complexity means they're doing something smart. I personally like to have only the number of accounts that I need, with a handful of investments that match my risk profile, goals, and personal situation. I don't buy complicated insurance products that have an investment feature and I don't invest in things that I can't simply explain to someone who doesn't work in the financial industry.
Diversification
This is a simple one. All your eggs shouldn't be in one basket. We can diversify through passive means or more active if you'd like. If you want to explore more active options such as rental real estate, that's something I can help you with. We can't avoid all risk, but diversification helps us spread that risk out.
Your Net Worth is Not Your Value
Yes, parts of your plan will cover cash flow, future income projections, asset values, tax savings, and other typical finance topics. However, this does not define, “how you’re doing.” How you’re doing is answered by looking at two things: (1) What do you want your life to look like? (2) Are you on track to get there? This isn't just financial. Your physical and mental health will always play a role in your financial health. The goal isn’t to die rich, it’s to live a rich fulfilling life that gives you purpose. Money just happens to be one of the tools that can help you get where you want to be.
Time in the Market
I am not a market timer. I’m not smart enough to predict exactly when the market is at a peak or has reached the bottom. I don’t believe that we can consistently guess right, twice. I also know that we run the risk of missing out on the best returns during a market recovery if we’re sitting on the sidelines. One of our best assets is time - don't work against yourself by reducing your time in the market.
More Than Math
There may be decisions that you want to make that don’t make perfect sense on a spreadsheet, and that’s okay. All too often I see people unnecessarily pounced on for suggesting that they're considering making extra mortgage payments. With a 2% mortgage, does this always make the most spreadsheet sense? Maybe not. Are there a lot of other variables to consider? Yes! And that’s why the action items in your plan will reflect more than math.
Life's decisions shouldn't be reduced to number crunching.