The number one factor of an investor’s success is their portfolio construction and diversification choices. For the best results, you need to know how to properly allocate your assets to get the most out of your money. At Saddock Wealth, we recommend you choose asset allocation best suited to your personal investment goals and your risk tolerance. The best time to set this up is when you are creating your portfolio.
Checking in on your portfolio construction now (no matter where you are in the process) will allow you to meet your future capital requirements and bring you peace of mind. Saddock Wealth is here to steer you in the right direction. Our team of professional portfolio managers will create a portfolio you will be proud of!
Investment Portfolios Explained
Simply put, an investment portfolio comprises a group of investments that you own.
You can use a portfolio to cover a single asset, or it could comprise assets from diversified sources. How you choose to invest is up to you, and it’s a decision that should be tailored to help you reach the financial goals you aspire to. Keep in mind that there are many diversification benefits you can enjoy.
Truly, investing is all about portfolio risk. How high-risk are you? As an investor, what risks are you willing to take? When constructing your portfolio, these questions are important to consider.
Don’t Overlook Attractive Return Opportunities
Keeping your investment portfolio diverse may seem like a lot to manage. But having your assets spread out is actually its own kind of safety net. Relying on only one or two asset classes could prove detrimental to your portfolio.
As an investor, you could miss out on great investment opportunities when playing it too safe.
Asset Allocation & Portfolio Construction
Asset allocation refers to how much money you want to invest in various assets. Where would you like to put them?
For instance, you can put all your money into one asset class, though we don’t recommend it. But since the decision-making process is often difficult, some investors might feel that owning only one asset is safer. One asset is safe as long as the market does well, but any economic instability could take your entire portfolio with it.
Therefore, asset managers recommend diversified portfolios for the best results. We recommend splitting your money between a wide range of asset classes. A well-balanced portfolio is one that is diversified.
This, however, will depend on your time horizon (how long you want to invest for). It also depends on your risk appetite. Risky assets are not everyone’s cup of tea. It all comes down to what level of risk are you prepared to take on.
Success Depends On Active Management
Successful investing depends on the diversification of your investment portfolio. But do you know how to determine the asset allocation that aligns with your personal investment goals? Does your portfolio conform to your personal risk tolerance?
An optimal portfolio should meet your future capital needs. This is important for peace of mind. Our team of portfolio managers at Saddock Wealth can offer you the insight and planning required. Active portfolio management will help you keep more of what you have built.
It pays to have a financial professional keeping an eye on your money.
The Power of Keeping it Simple
Above all, portfolio managers want what’s best for their clients. They strive to achieve this during the portfolio construction process. Portfolio management teams use different approaches to achieve varying results depending on client goals. There are many effective tools that work when constructing a client portfolio: Keeping it simple is perhaps the most powerful tool of all.
Some use the MPT (Modern Portfolio Theory) method. This method helps create diversified portfolios for risk-averse investors through careful asset selections.
Other asset managers use factor tilts, a method that prioritizes asset factors that bring in higher returns. Yet other portfolio managers track the market cycle over a certain time period. There is a range of approaches and investment tools, both traditional and less so.
In short, simple portfolios will often attain the best results. So don’t get tricked into thinking that complex portfolios are always more effective. Historical performance proves that simple portfolios have the best results regardless of what type of processes asset managers apply.
Also, remember that complexity in portfolio construction is costly to clients. The simpler portfolios are some of the most effective portfolios. Portfolio managers should pay careful attention to the internal expense ratios of the mutual funds and ETFs they use.
At Saddock Wealth, we know that actively managed mutual funds are not always costly and that ETFs are not always cheap. We strive to look for the best combinations of value and costs, with a focus on blended expense ratios of all the individual portfolios we build.
By saving clients even a small percentage annually by building elegantly simple portfolios, many years of additional retirement can be added add to clients’ retirement funds.
Why Caferul Portfolio Construction Is Your Best Investment Strategy
Constructing a portfolio is one of the best investment strategies in 2022. The investment process does not have to be complex; just having one puts you one step ahead of the crowd.
Accordingly, there are many asset classes available to choose from and diversification will minimize your measure of risk over the long term. Your investment manager will help you choose the right one for your specific portfolio.
Once you have a collection of assets, perfectly selected for your financial goals, your wealth will have space to grow.
Well-Balanced Portfolios and Effective Portfolios are Diverse
Remember to maintain diversification when constructing a portfolio and to diversify in each asset class. Spread your holdings within asset classes and across a wide range of subclasses and industry sectors.
In fact, you can achieve brilliant diversification with mutual funds and ETFs. These allow investors with small amounts of cash to collect assets that might otherwise be out of reach. These investments could also prove to be attractive return opportunities for investors across the board.
Saddock Is Here To Help!
At Saddock Wealth, our team will take a more in-depth look at your current portfolio. Our aim is to make your daily life easier while helping your money grow.
By understanding your goals, we can create the most effective and wholly customized plan for you. Let us help you achieve financial security with smart investment strategies in 2022. We build portfolios to get you results.
Schedule a meeting here and we can discuss your best options!