Invest With Advice / Equity Investments
Equity Investments
The articles and links in this section will be commentaries and educational pieces that relate to equity investing. Your equity market strategy evolves from both you and your advisor, a licensed Stock Broker, understanding what your investment objectives are and what the risks are in achieving them. Below you will find some questions that both you and your advisor should have clear answers for.
What is your investment time horizon?
Specifically when will you start to withdraw money from the equity portion of your portfolio?
What are your specific financial objectives?
Generally your objectives will move between growth oriented and income distribution oriented. Growth oriented can span decades (multigenerational), characterized by higher rates of return. Tax deferral strategies become more important. Estate plan should be created for efficient wealth transfer. Income oriented objectives have a shorter time horizon, much smaller equity component, lower and less tax efficient rates of return.
Are you happy with your current rate of return?
If yes, what do you base it on?
What are the specific metrics being used to measure performance?
What strategies have you implemented to mitigate tax?
Tax is usually the single biggest drain on wealth. There are many simple tax deferral strategies that are underutilized. Sometimes a simple alternative can result in modestly higher tax payments, but lower costs.
What is your ability to assess risk accurately?
In the Investment and academic community risk is generally defined and measured as volatility of returns. In the real world I find that risk to the client is the risk of a permanent impairment of capital. Thus it becomes important to distinguish between a temporary fluctuation in price and a permanent loss of capital. There are many studies that show that most individual investors do not outperform market indices. I believe that a major contributor to this underperformance is a result of not understanding the risk in your portfolio.
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