INVESTMENT PRINCIPLES
Agile Financial Planning uses a set of guiding principles that inform and shape how client investment portfolios are developed.
Core Beliefs
Modern portfolio theory is the foundation for the investment advice given to clients and how their portfolios are structured.
Other considerations include:
- Investors require an adequate level of potential portfolio returns for taking on the corresponding level of risk.
- Markets are efficient so it is not possible to anticipate the future direction of individual securities or markets as a whole. It is unlikely that any portfolio can consistently succeed in “beating the market.”
- High emphasis is placed on asset allocation because portfolio returns are almost exclusively dependent on the mix of asset classes in the portfolio.
- Portfolio risk can be decreased by increasing diversification of the portfolio and by lowering the correlation of market behavior among the asset classes selected.
Other considerations include:
- Investing in foreign and emerging markets as well as domestic markets can minimize overall portfolio risk due to the imperfect correlation between economies of the world.
- Though equities offer the potential for higher long-term investment returns than cash or fixed income investments, they are also more volatile in their performance.
- It is important that Investments correspond to the clients’ time horizon and level of risk they are able to take on.
- Minimizing transaction costs and service fees help to achieve higher overall returns.
- Tax efficient investment strategies help to maximize income tax returns
