Financial Architects
Financial Planning & Wealth Management
Many firms use “risk tolerance” questionnaires to determine this for their clients, but a client’s risk tolerance isn’t a static measurement like their height; it varies over time. “Risk tolerance” is a terrible term because it encompasses three different factors: Risk capacity – how much risk the client can afford to take. Risk propensity – how much …
As wealth managers, we are frequently asked some variation of the question “So, what do you think the market is going to do?” or “What do you think of XYZ stock?” Those are difficult questions to answer, and this month’s post is an attempt to explain our perspective. The reason that those questions are problematic …
A while back the topic of “Investment Rules” came up in an email exchange, and I wrote a quick list of mine. These are just my simple, and perhaps arbitrary, rules. I’m mostly trying, as Charlie Munger said, to not be stupid: “It is remarkable how much long-term advantage people like us have gotten by …
A while back I was thinking about advice for younger professionals so I read a few networking books. (I thought I had read them a long time ago, but apparently I picked up the essence without ever actually reading the books. I corrected that.) Anyway, I highly recommend, Give and Take. A related book is …
A fellow advisor wrote in a professional online forum last year, “[I]n rocky times I turn off dividend reinvestment and let the cash build so if they need money from me, we don’t have to sell principal.” I want to comment not only on that, but also on so-called bucket strategies that I don’t think …
Dollar Cost Averaging (hereafter DCA) is the technique of periodically investing a fixed dollar amount to reduce risk. Proponents claim this “drastically reduces market risk” by purchasing fewer shares when prices are high and more shares when prices are low. Financial research has shown, however, that DCA does not perform better than investing randomly. What …