Monday, November 21, 2016

Goals Based Investing - What Is It & Why You Should Be Using It

Today I wanted to discuss a topic that I feel very strongly about and one that I do not believe enough advisors are offering their clients - Goals Based Investing or GBI for reference purposes.

Remember when you were young and that new had-to-have item came out but your parents told you it was too expensive and you'd have to save your own money to buy it? I take my clients through a similar process during our initial meeting discussing their goals and aspirations. Too often I see advisors wanting to categorize their clients as a 60/40, 80/20, or 50/50 model (stocks/bonds ratio) but the problem is this is an archaic method of determining a clients' needs. Which is why I've chosen to establish goals first, and then offer an investment recommendation (if any) last.

Typically people have 3 or 4 goals or buckets of money that are of utmost importance to them. These include, but are not limited to; an emergency fund, retirement fund, down payment fund, college fund, vacation fund etc. The idea behind utilizing this approach as opposed to grouping all of your assets into one large portfolio is that it allows us to set different risk tolerances for different goals. Instead of looking at all your investments as one large account we separate them into different goals and address each on a case by case basis.

Furthermore, this new investing style is not concerned with benchmarks. What relevance will it have on your life if you're able to say that your investments outperformed the S&P 500 75% of the time? None. However, what will have relevance to your life is the security of knowing you'll be able to put your kids through college, fund the retirement lifestyle that you desire, or be able to purchase that new home you've been investing for. Those are real-life goals that will be measured in terms of how close you are to achieving that goal and not an arbitrary benchmark with no significance to your situation.

Model portfolio allocations are ancient and don't address the things that investors care most about. Investing for a specific purpose and seeing how close you are to achieving each goal is a far more efficient style. Always be sure to work with someone who listens to your goals and then creates an action plan to reach them.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary.
 

Friday, November 11, 2016

3 Sectors Poised to Rise Under a Trump Presidency

Well, the election has come and gone and we've all had time to digest the results. Regardless of your political stance, Donald Trump will be the 45th president of the United States. My job is not to argue whether I think this is a positive or negative, but rather to show you where I see potential opportunities with Donald Trump now entering the White House.
 
Financial: The financial sector was going through major regulation during the Obama administration and perhaps it's only shinning light was going to be the eventual rise in interest rates. Upon finding out Trump was going to be our next president the financial sector has taken off with no plans of looking back. Why is this some may ask? We assume, given his prior statements and stances, that regulation on the financial industry will be loosened under President Trump. Pair that assumption with a rise in interest rates and you have a recipe for growth. That being said, look to the banking industry and other financial organizations to do particularly well with Trump in the White House.
 
Biotech/Pharmaceutical: Next we'll take a look at the biotech/pharmaceutical industry. Perhaps no industry feared a Hillary Clinton win more than biotech/pharmaceutical. In fact, many of the stocks in this sector had already began pricing in a Hillary presidency. Clinton had every intention of attacking drug makers going as far as saying she would appoint a task force that would monitor price-gouging. Trump didn't lay out any specifics in regard to his plan, he did make mention however of giving Americans the ability to buy their drugs in other countries such as Canada where they could find them cheaper. Trump doesn't have nearly as strong of a stance on this industry as Clinton did, leading me to believe they'll do far better with him in the oval. 
 
Defense: There was no possible way I could write this without including the defense industry. I'm not arguing Clinton would have decreased defense spending drastically but I am saying that Donald Trump has made it his prerogative to enhance our military and enforce our second amendment rights. Trump has taken the traditional republican stance that defense is not only good for the economy and jobs but for national safety as well. Meaning investors in defense contractor companies such as; Lockheed Martin, Boeing, Northrup Grummam and others appear to be bullish under a Trump presidency.  
 
 
The views expressed are not necessarily the opinion of Woodbury Financial Services, Inc., and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Individual circumstances vary. Investing is subject to risks including loss of principal invested. No strategy can assure a profit against loss.