Investment Management Services

How Do Investments Fit into My Retirement Planning?

Your investment portfolio is the engine of your retirement journey. How well your investments are managed will help determine your ability to reach or exceed your long-term retirement goals. 

Because your wealth needs to be grown over time - and simultaneously protected - each element of your investment plan must be carefully considered and tailored to your unique needs. As economic, market, and political winds shift, your investment strategy needs to adapt accordingly. Further, as you progress throughout your life, your goals are likely to shift as well. As a result, a cookie-cutter approach to investment management isn’t likely to provide you with the best outcomes possible.  

In retirement, you don’t need guesswork, you need robust custom planning. So, how does this work in the real world? 

Investment Management

What Are the Building Blocks of an Investment Portfolio?

Although we can’t predict how markets will perform in the short-run – and we feel that it’s highly unlikely anyone else can either - we can focus on building a portfolio that increases the long-term probability that your plan will be successful over time. Each part of your portfolio, whether stocks, bonds, or income-focused annuities, plays a unique role in the risk and return profile of your portfolio. When combined, they create a path towards achieving your personal financial and retirement goals.

Stocks

Investing in publicly traded companies can increase the growth potential of your overall portfolio. We believe any prudent stock portfolio should be invested in companies with a track record of success, with plenty of cash on hand, a durable competitive advantage in their market, while maintaining low corporate debt.

Bonds

High-quality bonds are the bedrock of your portfolio and can preserve what you’ve worked hard to achieve. A reasonable allocation to high-quality bonds can help reduce the amount of declines in market downturns and help you recover faster.

We design investment portfolios to help you achieve your financial goals. We don’t believe in trying to time the market, anticipate trends, or identify mispriced investments. These techniques have been shown to be a highly unreliable way to build wealth.

How Does Risk Affect My Investments?

If you want the potential for more return, you’ll need to accept more risk and likely greater fluctuations in value. Sometimes these risks pay off with more return, but sometimes they result in losses. Although adding more unique sources of risk and return can create a portfolio with steadier growth, we don’t believe in taking more risk than you’re comfortable with and is appropriate. 

Diversification has been called “the only free lunch in investing”. This is because using a single stock, strategy, or investment type is riskier than mixing lots of different types of investments. Holding multiple investments reduces the risk that any single investment will cause an outsized decline in portfolio performance.

By focusing on the areas within our control, such as setting a thoughtful investment strategy and following a disciplined review process, tilt the odds of investing success in your favor.

After all, it’s not timing the market that matters most to disciplined investors, it’s time IN the market.

How Can an Advisor Help Me with Investment Management? 

The Value of Financial Advice

A financial advisor serves a dynamic role in your both your financial planning and investment management. Your advisory team works closely with you to build a comprehensive financial and retirement plan, but they also manage myriad relationships with investment custodians, investment managers, and dozens of other service providers behind the scenes, on your behalf. 

It’s important to recognize the many ways in which an advisor and investment manager can add value to your planning. Rushing to judge only investment performance, for example, can dramatically limit the understanding of the total advisor value proposition. For example, some of the value attributes measured by Vanguard for example, in their Vanguard Advisor’s AlphaTM study, include:

  •     Suitable asset allocation using broadly diversified funds
  •     Cost-effective implementation (expense ratios)
  •     Rebalancing
  •     Behavioral coaching
  •     Asset location
  •     Spending strategy (asset withdrawal order)
  •     Total-return versus income investing

Advisors who regularly utilize these wealth management best practices are shown to be worth “About 3%” annually to a client’s bottom line, according to Vanguard. 

Additionally, in a Forbes article by Wade Pfau, Ph.D., CFA titled, The Value of Financial Advice, he adds several additional profitable planning behaviors that a seasoned advisor can help a client adopt, each of which can add significant value. Examples include: 

  •     Total wealth asset allocation 
  •     Dynamic withdrawal strategy 
  •     Tax efficiency through asset allocation and withdrawal sequencing 
  •     Liability relative optimization
  •     Social security optimization 
  •     Annuity allocation 

When deployed properly, each of these optimization strategies can add quantifiable value to a retiree’s net results. 

Summary

While each person or family has vastly different financial needs and objectives when considering their retirement planning, there are several common desires that we all share. We all desire to have our best interests to be served, transparency in our relationships, and competency in the counsel we receive, all for a reasonable and fair cost.  

When you were young, your most valuable asset was time. You had time on your side then. You could afford more aggressive investments and you could afford more risk. As you get older, you don’t have as much time to whether storms or to fix investing mistakes. When your time is relatively short, you may need to think differently about your investments. 

Contact Us

Contact us to schedule a discussion about investment management and how it fits into a comprehensive retirement plan.

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Fourth Dimension Financial Group LLC

FOURTH DIMENSION FINANCIAL GROUP
27121 Oakmead Dr.
Suite B
Perrysburg, Ohio 43551