At Prentice Financial Planning, we believe in utilizing five core tenets in order to achieve success in investing:
I. The foundation of these tenets is to be a long-term investor. Year by year investment returns will hit peaks and valleys but focusing on a long-term plan will result in better decision making.
II. “Don’t put all your eggs in one basket”– it might be a cliché, but it’s true for investing. A globally diversified portfolio enhances your risk-adjusted return.
III. With all other factors being equal, the more we can reduce the internal and trading fees of an investment, the more money you will keep in your pocket.
IV. By using certain techniques to reduce taxes we can increase your net return.
V. The last and usually most significant piece that we provide our clients is behavioral coaching. The fight or flight instinct of human nature does not play well with the investing world. It is our job to guide you through the roller coaster ride of the markets and to remind you to be patient, persevere and focus on your goals.
We follow a process driven approach to building portfolios in order to ensure that academic research and not emotional biases direct their construction.
I. Capital Market Assumptions - Assign all asset classes a 10 year return and risk expectation
II. Optimize Asset Allocation - Using the Capital Market Assumptions find the mix of asset classes that give you the best risk adjusted return.
III. Portfolio Construction - Find the most appropriate vehicle (mutual fund, exchange traded fund, etc.) to represent each asset class.
IV. Monitor and Evaluate - Constantly monitor portfolio construction and re-evaluate the Capital Market Assumptions and asset allocation on an annual basis.