Simplified Approach to Investing for Long Term Wealth

If you are a beginning investor, we emphasize the most important factor in establishing your long term wealth accumulation is to SAVE MONEY. That includes making a conscious effort to spend below your means, and save, save, save.

Many young investors are surprised when we show them the academic research indicating the rate of return on their investments makes little difference in the first 6-8 years of accumulation. The power of compounding begins to make dramatic differences thereafter, as it requires shorter and shorter time periods for their money to double (reaching one to one), and again (two to one), and again (three to one).

For veteran investors who have already accumulated substantial assets, we believe asset allocation to be by far the single most important factor contributing to their long term wealth. According to Ibbotson independent research studies, 91.5% of a portfolio's performance is attributable to its asset allocation policy.

Our own professional investment experience has mirrored the Ibbotson studies revealing that 100% bond or fixed income portfolios are not completely 'safe' when you factor in the erosion effects of income taxes and inflation. Research by Ibbotson indicates a 100% bond portfolio does not provide adequate return to offset inflation. However, an Ibbotson study spanning the period 1970-2002 revealed that a 24% mix of equities with a 76% bond portfolio actually reduces the risk while adding more return to the portfolio.