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Our Philosophy - Your Four Pillars

Pillar One:  Duration

Traditionally, duration was determined by an individual's age.  However, the duration today is viewed as being more closely linked to the goal for the investment.  If the goal is to pay for college for a six year old child, the duration would be approximately twelve years.  If the goal is retirement income and the client is twenty-five, the duration would be more than forty years.  

Pillar Two:  Determination

While the initial amount is important in determining what types of products are available as investment vehicles, the overall amount is more important.  Adding to the amount invested despite ups and downs in the market is important to increase the opportunity for growth.   Typically, employers contribute to an employee's retirement program on a biweekly or monthly basis.   Following this model, for all account types, leads to the benefit of dollar cost averaging over time.   

Pillar Three: Diversification

Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries, and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event.

Investors confront two main types of risk when investing. The first is undiversifiable, which is also known as systematic or market risk. This type of risk is associated with every company. Common causes include inflation rates, political instability, war, and interest rates. This type of risk is not specific to a particular company or industry, and it cannot be eliminated or reduced through diversification—it is just a risk investors must accept.

The second type of risk is diversifiable. This risk is also known as unsystematic risk and is specific to a company, industry, market, economy, or country. It can be reduced through diversification. The most common sources of unsystematic risk are business risk and financial risk.  Thus, the aim is to invest in various assets so they will not all be affected the same way by market events.

Pillar Four:  Discipline

Investment discipline isn’t easy.   Most individual investors react emotionally to market moods and tend to chase performance.    The best way to maintain discipline is have a long term investment philosophy that is followed through all market conditions.  This is extremely important as research done by Dalbar, Inc. has consistently shown that the market indices outperform individual investors.   The majority of this disparity results from illogical investor behavior based on emotion.    Having a team of financial advisors to review your plan with you on a regular basis and make changes only when needed can help reduce your tendency to make emotional investment decisions.   We are here to help you reduce the market emotions cycle.