With an understanding or your goals, objectives, risk tolerance and time horizon we derive your personalized investment plan. We implement and monitor those recommendations via diversified portfolios of low-cost mutual funds and Exchange Traded Funds (ETFs). Our disciplined approach to portfolio design and maintenance prevents your emotions from driving your investment decisions, either in a frightening bear market or an exciting bull market.
In year 1 we construct a portfolio to meet your personal goals. It will generally include the following components: (click on the headings below to learn more)
Risk analysis is a process for finding the appropriate level of investment risk you should take considering the risk required to meet your goals, your capacity to take risk, and the level of risk you’re willing to take.
The asset allocation decision (how much of your portfolio to place in low risk/low return assets like cash, CDs, and bonds, and how much of your portfolio to place in high risk/high return assets like stocks) is the most fundamental decision you make as an investor. We educate you on the historical risk and reward characteristics of various asset allocations, and help you select an allocation that is sensible given your spending needs, your risk tolerance, and your time horizon. We’ll document that decision in an Investment Policy Statement, and revisit that decision periodically based on changing circumstances
We use broadly diversified, low-cost, no-load mutual funds and Exchange Traded Funds (ETFs) for the equity (stock) positions of your portfolio, and cash, bond funds, bond ETFs, and bond ladders for the fixed income positions. When appropriate, we also utilize diversifiers such as REITs, natural resources, and commodity funds. Our portfolios are primarily composed of index funds, ETFs, passively managed mutual funds, and no-load mutual funds designed to provide the long term benefits of diversification and keeping expenses low.
We complete the account applications and transfer paperwork to move the appropriate accounts to Schwab Institutional, the custodian of your managed accounts. As the custodian, Schwab holds and prices the securities you own in each account, and reports to you independently each month. This separation of duties should provide you with peace of mind — trueNorth never takes custody of your assets.
Establish an Investment Policy Statement (IPS)
We establish an Investment Policy Statement that identifies your general investment goals and objectives and how we will work to achieve them. The IPS will confirm your asset allocation, risk tolerance, and distribution requirements.
Rebalancing is the process of reallocating the securities in your portfolio to return to your desired asset class targets. Rebalancing forces an investor to buy low and sell high, and is contrarian in nature -- therefore very hard for individual investors to do in turbulent markets.
Efficient Tax Management
To keep your taxable accounts as tax-efficient as possible, we employ tax management strategies such as using new deposits to rebalance, placing rebalancing trades in tax-deferred accounts, using tax-free municipal bonds, placing index positions in taxable accounts, and harvesting tax losses.
Distributions as Needed
If you are taking withdrawals from your portfolio, we determine the optimum account and the optimum source for the distributions (maturing bonds, interest payments, cash from fund distributions, or equity profits); we manage the process of turning your nest egg into a retirement paycheck.
On an annual basis, we provide reports that will tell you how your portfolio performed over the year along with a cumulative analysis since we have been working with you. Our reporting package starts at the portfolio level and includes additional analysis down to the individual portfolio holding.
In year 2 and beyond, your portfolio is monitored and maintained to continue to support your personal goals.