Investment planning is the process of harmonizing your investment portfolio with your overall financial plan. There are numerous investment planning considerations that should be addressed when properly developing your investment plan. Balancing withdrawal needs with the desire for growth, coordinating the use of various account types, and integrating tax, expense, and opportunity costs within the decision making process are some examples. Liquidity Planning.Market volatility and the possibility of declines are normal and necessary aspects of investing.During the accumulation phase, these down market periods can be leveraged in your favor.When you are relying on your investment portfolio to fund your lifestyle needs, these periods can become damaging.The key to insulating your investment portfolio from market volatility is what we refer to as Liquidity Planning.
Damage occurs to the financial plan when funds needed for spending purposes are withdrawn from an investment that is currently down in value.In order to reduce the likelihood of this occurring, a Liquidity Plan must be developed to specifically account for your planned withdrawals over at least the next five years.
Planning for liquidity needs over this period greatly reduces the likelihood of having to sell equity investments when their value is down, thereby insulating the portfolio.This liquidity plan forms the beginning of the overall asset allocation for your portfolio.
Target Allocation.The overall asset allocation, simply the balance of stock investments to fixed income investments, dictates the risk relative to reward posture of the portfolio.With the liquidity plan as the fixed income baseline, we work with you to establish a target allocation for your portfolio that balances the need for long-term growth with your tolerance for the risks of investing.
Holistic Portfolio Design.Once the target allocation has been established, the portfolio can be designed.Our holistic approach means the portfolio as a whole is more important than any one piece.Designing the portfolio holistically emphasizes the efficient use of the various accounts that are involved.Taxes, expenses, and freedom of investment choice are some of the factors that affect the design of your portfolio.Balancing these considerations advances an investment strategy that maximizes the use of the tools that are available to you.
Investment management is the continued accountability for portfolio design, investment vehicle selection, and efficient implementation. It further entails the responsiblity for monitoring, rebalancing, and tactical allocation decisions.