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Investment Management

Investment Management

 

Yes, there is a method to the madness

Successful investing isn’t about skill.  It’s about behavior.  Investing requires objectivity and discipline.  Research studies have shown there is a gap between investment returns and investor returns.  Sadly, independent investors often react to the sensationalism created by the media and their own emotions.  As a result, they tend to trade too often and at the wrong time.  This behavior has proven to greatly reduce returns.  In effect, investors buy high and sell low.

Investment Tenets

  • Adhere to a passive management strategy.

  • Build a diversified portfolio engineered to targeted asset categories

  • Always be fully invested within your risk tolerance

  • Rebalance as required

  • The managed portfolio is long-term money (5 years or more time horizon)


Active vs. Passive

In portfolio management, there are two basic paths of management an investor follows:  active management and passive management. 

Active investment management uses research and analysis to select investments that the investor believes will out perform the general market.  In contrast, the goal of passive management is to achieve market returns.  All the research and analysis in active investment management comes at a cost; usually higher turnover in the portfolio, potentially generating higher trading costs, commissions and taxes.  The active manager must overcome the additional costs in portfolio return.  The question becomes: is the potential for additional gain over a passive strategy worth the near-certainty of additional cost. 

Passive investing seeks to take some of the prognostication out of the selection process, as well as the potential of emotional decision making.  When decisions are based on subjective information, it is easy to get caught up in the next great thing.  Ignoring the hype in favor of a disciplined buy-and-hold tactic, may keep your portfolio on track. 

Passive investment management does not mean buy-and-ignore.  Your portfolio will need to be rebalanced periodically – selling the asset classes that are performing better than expected and buying the asset classes which have lagged.  By following this disciplined approach, you are in essence, buying low and selling high.


Planning for Success

All investments involve risk, whether the portfolio is managed as part of an active or passive strategy.  Passive investing does not “loss-proof” your portfolio.  What passive investing offers is style consistency, lower costs and tax efficiency.  All these factors allow the passive manager to build and maintain a diversified portfolio with the goal of managing risk.

Successful investing requires designing and maintaining a long-term investment strategy based on your unique needs.  Asset allocation is essential to that plan.  The strategy shifts the focus of investing from trying to pick winners to being invested in many unlike investments at all times.

No one knows what will happen to financial markets next week, next month or next year; but we still need to invest for the future.  In essence, asset allocation eliminates the need to predict the direction of the market and eliminates the risk of being in the wrong market at the wrong time.  Asset Allocation is not an exciting investment strategy, but when it comes to long-term investing, boring can be very profitable.


DFA- Dimensional Fund Advisors

At Charleston Financial Advisors we deliver our clients world class institutional level investment advisor services based on Nobel Prize winning financial, economic & academic theory. Generally speaking:

  • Capital markets work - risk and return are directly related,

  • Portfolios are broadly diversified providing reliable exposure to asset classes worldwide,

  • Portfolios are engineered through risk dimensions to surpass their benchmarks net of fees,

Nobel laureates and renowned professors in portfolio & economic theory from the likes of Harvard, Stanford, University of Chicago and Wharton sit on the board of Dimensional Fund Advisors. Dimensional fund shares are not available directly to individuals but are limited to clients of a select group of fee-only financial advisory firms. The relationship between Dimensional and the independent advisor is based on shared views about how capital markets work and how best to provide clients with a successful investment experience. 

 

Contact

➤ LOCATION

4 North Atlantic Wharf
Suite 200
Charleston, SC 29401

☎ CONTACT

contact@charlestonfinancial.net
(843) 722-3331


What Not to Expect

  • Bragging Rights:  If you happen to hold an investment on somebody's top 10 list, it will be by chance.

  • Hot Stocks:  We will not be jumping in and out of trendy investments or acting on hot tips

  • Sales Calls:  This is a fully invested long-term strategy.  We are not paid to sell you anything.


Fees

Fees are based on a percentage of assets under management (See our Current Fee Schedule) or long term retainers.