An investment strategy is a set of rules, behaviors or procedures, designed to guide an investors selection of an investment portfolio. Individuals have different objectives, and their individual needs make different tactics and strategies appropriate. Some choices involve a trade off between risk and return. Most investors fall somewhere in between, accepting some risk for the expectation of higher returns. Different strategies may include: Active vs Passive, Momentum, Buy and Hold, Indexing, Value vs Growth, Dollar Cost Averaging, Alternative Investing or Contrarian Investing.
Asset allocation aims to balance risk and reward by apportioning a portfolio assets according to an individual's goals, risk tolerance and investment horizon. Asset allocation is based on the principle that different asset classes perform differently in different market and economic conditions. Traditional major asset classes include; Equities, Fixed Income and Cash. Each of these can be broken down into many smaller asset classes as well. Additionally there are Alternative asset classes which may include; commodities, commercial real estate, private equity, etc.
Manager selection is an important step in implementing any investment program. Investors select portfolio managers and companies to act as their agents, and portfolio managers are then expected to perform to the best of their abilities and in the investors’ best interests. Investors must practice due diligence when selecting portfolio managers. They need to not only identify skillful managers, but also determine the appropriate weights to assign to those managers. For example, many fund companies offer an S&P 500 fund, however how do you choose which fund to use?
Once an investment portfolio has been designed and implemented, the main job of an investor and their advisor is to monitor the portfolio to see if it is performing as it was designed; and within the normal swings of the market. Proper monitoring can disclose when a manager should be terminated or given more money, if the portfolio is in or out of balance versus its target strategy, whether tactical moves might be productive, whether the overall portfolio design needs to be revisited, and so on. At Legacy Wealth Management we assist in performance reporting and helping you understand what is happening with the portfolio. You are just not left with a monthly or quarterly statement where you all but need an accounting degree to understand it.
LIFE INSURANCE SERVICES
Once you have an investment account Legacy Wealth Management can help with the details most people get lost in or forget to complete. Many times once an account is established there may need to contribution or distribution instructions set-up. Contribution limits need understood within the rules set by the IRS. Re-balancing may need to me executed, along with minor adjustments. There is the occasional address change and making sure all accounts are updated.
This is one area that can be overlooked if not reviewed regularly and can throw off the desired outcome of your estate, will or final wishes. A beneficiary typically refers to someone who is eligible to receive distributions from a trust, will or life insurance policy. Beneficiaries are either named specifically in these documents or have met the stipulations that make them eligible for whatever distribution is specified. Typically, any person or entity can be named a beneficiary of a trust, will or life insurance policy, and the one distributing the funds, or the benefactor, can put various stipulations on the disbursement of funds, such as the beneficiary attaining a certain age or being married. There can also be tax consequences to the beneficiary. For example, while the principal of most life insurance policies is not taxed, the accrued interest might be taxed. We can help you review your beneficiary designations and keep them current to meet your needs as life changes.
When you open an investment account, one of the very first important choices to make is the “type” of account to set up. Each account has its own set of rules and they may differ from state to state. When the type is chosen the registration of that account takes place. We can help you understand the difference of each account and make the correct choice. For example, most people don’t know there are certain account registrations that allow you to set up the beneficiaries of the account, similar to a retirement account or insurance policy, which will bypass probate and expedite your final wishes without the additional cost.
Legacy Wealth Management will monitor your investments to make sure you are on track with the established strategy on a continual basis. This is in addition to the regular meetings we’ll have with you one-on- one. We will compare investments to their peers, benchmarks and other criteria. We will confirm investments previously selected for the plan are still appropriate and the investment’s style has not shifted. If at any time we feel anything has changed within the investment or markets to make the investment no longer prudent a change will be recommended.
Tax efficiency is essential to maximizing returns. Due to the complexities of both investing and U.S. tax laws, many investors don't understand how to manage their portfolio to minimize their tax burden. Simply put, tax efficiency is a measure of how much of an investment return is left over after taxes are paid. The more that an investment relies on investment income – rather than a change in its price – to generate a return, the less tax-efficient it is to the investor. Or during retirement how do you structure your income to maximize efficiencies and lower your tax burden. Before investors can take any steps toward tax-efficient investing, they must first determine how their accounts are structured. Generally speaking, accounts can be taxable, tax deferred or tax exempt. For taxable accounts, investors must pay taxes on their investment income in the year it was received. Taxable accounts include individual and joint investment accounts, bank accounts and money market mutual funds. On the other hand, tax-deferred accounts shelter investments from taxes as long as they remain in the account. Any kind of retirement account – 401(k) or IRA – is a tax-deferred account. For tax-exempt accounts, investors do not need to pay taxes even at withdrawal.
At Legacy Wealth Management we encourage the use of Dave Ramsey’s 7 baby steps to eliminate debt from your life and build wealth. Debt Management companies are a growing business and they are out to make a profit and most don’t care about your credit along the way. There is no silver bullet to eliminating debt. As Dave Ramsey says it is 80% behavior and 20% head knowledge. We can help with the 20% head knowledge by setting up a plan in line with the debt snowball approach and then encourage you to perform on the remaining 80% behavior. We will be your coach and support to meet your goal of eliminating debt from your life.