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Investment Philosophy

Attempting to time the market is not an effective means to attain your investment goals. Instead, a well-thought-out and disciplined portfolio management process should be implemented to optimize the probability of success. Without such a process, investors often make damaging decisions based on false overconfidence or panic due to short-term market fluctuations.

In contrast, Commencement Financial Planning LLC adheres to an investment philosophy that provides a solid foundation to assist you prudently manage your investments according to your time horizon, goals, and risk tolerance. This philosophy is based on a collection of fundamental principles proven to greatly increase the probability of your success.

More information regarding investment strategy and process can be found here.

The following principles have been adopted as the foundation of our investment portfolio management process:

Investment Strategy

You should understand your investment strategy and how various investment vehicles complement it. If you don't understand how an investment complements your overall strategy, you should either gain that understanding or not own it.

Risk Tolerance

You should properly assess your risk tolerance. Properly assessing your risk tolerance will allow the construction of an investment portfolio with characteristics commensurate with your goals and attitude toward price volatility.

Withdrawal Program

You should develop a saving and/or withdrawal program best suited to meet your goals. Without such a program, meeting your goals is left largely to chance. 

Properly Diversify

You should properly diversify. Markets have historically been quite volatile and erratic over the short term. Consistently predicting which asset classes will outperform is not possible. Instead, clients should properly diversify across asset classes to increase the probability of good performance during any market environment.

Fee Aware

You should be fee aware. Fees are a major impediment to long-term investment performance. Fees can be greatly reduced by utilizing low-cost mutual funds and ETFs while limiting transactions to only those that make economic sense.

Tax-aware

You should be tax-aware. Though taxes are inevitable, strategies should be implemented to maximize after-tax returns.

Strategic Allocation

You should occasionally rebalance your portfolio to its strategic allocation. Appropriate rebalancing ensures a portfolio's risk and return characteristics remain consistent over time.

Investment Process

You should have an investment process only as complex as necessary. Investing needn't be complex and should always be transparent. Complexity and/or lack of transparency can greatly reduce your probability of success.

Investment Policy Statement

You should develop and adopt an Investment Policy Statement (IPS). A well-constructed IPS not only creates a disciplined process necessary for proper portfolio management but also serves as a report card with which to measure progress and make necessary adjustments over time.