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Portfolio Management
Benefits of Portfolio Management
Growing Your Portfolio
Helping you make more money for yourself, your family, and your beneficiaries. Investment advisers help clients overcome the behavior gap and earn their fair share of the market’s returns.
Saving You Time & Energy
Take the burden of researching and investing off yourself so you can focus on doing what you love.
Peace of Mind
The confidence of knowing that your money is being managed by a fiduciary to help protect against loss and manage risk.
What is Portfolio Management?
A set of investing actions designed to achieve your financial goals.
Portfolio management is a set of investing actions designed to achieve your financial goals in a way that works for you. It includes an overall allocation, individual investment selection, and ongoing monitoring and rebalancing.
A proper investment management strategy will achieve your short-term and long-term goals. It takes into account your risk tolerance, time horizon, withdrawal needs, tax strategy and investment preferences.
Our Approach
How Farnam Financial Approaches Investment Management
As fee-only advisors, we tailor your portfolio to your goals and preferences. In other words, we’re in favor of doing what works for you.
Our investment philosophy with stocks is called evidence-based investing which involves buying and holding index funds on the stock side of the portfolio. We’ve found that index funds provide superior returns to individual stock picking or holding high-cost mutual funds. Picking individual stocks or buying mutual funds that pick individual stocks is called concentrated investing. In our experience, retiree-investors get the greatest benefit from using evidence-based investing.
Our clients look to us to create a monthly “retirement paycheck” that they can rely on. For income generation and protection of your principal, we also utilize investments ranging from individual bonds to bond funds and preferred stocks.
While we can’t control the market, we can control the fees you pay. As fiduciary advisors, we are obsessive about minimizing fund fees.
We have a four-step investment process:
- We get to know you. We’ll listen to your goals, concerns, and preferences. We’ll also review your current portfolio.
- We offer specific recommendations, written in plain English, for each goal that you have whether it be short or long-term. We’ll explain the why behind our recommendations and the pros and cons. We’ll listen to your feedback and collaborate to find what works for you.
- We implement the strategy. Farnam will implement changes on your behalf. We think you should never pay a commission to buy or sell an investment – so if your brokerage firm charges one we promise to pay it for you.
- We monitor and rebalance on your behalf. We review your account weekly and make adjustments to ensure your portfolio stays on track to meet your goals.
Meeting with an Investment Adviser
Here’s what you can expect when meeting with a financial advisor: First, a holistic discussion about your goals, concerns, preferences, and current finances. Second, you can expect a set of portfolio recommendations that include an overall portfolio allocation and a selection of individual investments. These recommendations should all be made with fees and taxes in mind. The portfolio manager should make it clear what kind of portfolio allocation will help you achieve your goals and what to expect from the specific portfolio they’ve recommended.
Frequently Asked Questions
Consider using the principle of asset location. Put simply, you may be able to save substantial money every year by:
- Placing your high-tax investments like bonds inside your Traditional IRA or 401k,
- Placing your low-turnover / low-tax investments like index funds inside your taxable brokerage account, and
- Placing your prospectively highest-return investments inside your Roth IRA. You may be surprised at how many people overlook this opportunity.
After serving hundreds of retiree clients, we know there is no one-size-fits-all answer. It depends on what you’re trying to accomplish with your portfolio, how easily you tolerate drops in portfolio value, and what kind of portfolio withdrawal needs you have. We’ve found that regardless of where your risk tolerance is before retirement, it tends to decrease after retiring. It’s simply not as easy to tolerate price drops when you have a shorter time horizon for them to recover.
Both real estate and stocks can be outstanding investments over time. US Stocks have historically earned an impressive 10% annually. Real estate can do better or worse depending on the specific deal. Real estate can be especially useful for cash flow generation and tax deductions. We’re happy to review and advise on real estate opportunities as they come up. We will also coordinate your stock and bond holdings with your real estate holdings.
Get in Touch Today
Contact one of our fiduciary financial planners today to learn how we can help you meet your financial goals.