There is no single correct way to invest but there are many wrong ways that should be avoided, and doing so can improve your long-term results.
Like professionals in most other industries that provide advice, we go with what the evidence suggests, and try to leave personal opinions out of the equation.
Below is a breakdown of our investment strategy here at Meredith Wealth Planning so you can decide if we are a good fit for your needs.
"So who still believes markets don't work? Apparently it is only the North Koreans, the Cubans and the active managers."
Rex Sinquefield - Co-founder & board member, Dimensional Fund Advisors
Capital markets have created immense wealth over time. Many investors would benefit by simply understanding this simple fact. Historically, investor activity and behavior has only detracted from these returns.
"Hint: money flows into most funds after good performance, and goes out when bad performance follows.“
John Bogle – Founder, Vanguard Group
Past performance is no guarantee of future performance. Sadly, many investors ignore this fact and flood money into money managers that have performed well in the past. Why play that game when you don’t have to!
"Everybody has some information. The function of the markets is to aggregate that information, evaluate it and get it incorporated into prices.“
Merton Miller, Ph.D, Nobel Laureate in Economics
The world is not black and white, and investors can choose to combine the best of both active investing along with passive management. Factor investing is a systematic approach acknowledging market prices and information without having to predict future outcomes.
“Markets are efficient, but there are different dimensions of risk and those lead to different dimensions of expected returns. That's what people should be concerned with in their investment decisions and not with whether they can pick stocks, pick winners and losers among the various managers delivering basically the same product.”
Eugene Fama, Ph.D, Nobel Laureate in Economics
Not all stocks are created equal; therefore, not all stocks should have the same expected return into the future. Academic research has uncovered additional company characteristics that have historically rewarded investors with additional returns.
"Cultures, nations, religions, and people are not rocks. They are in constant transformation.
Hans Rosling – Author, "Factfulness: Ten Reasons We're Wrong About the World - And Why Things Are Better Than You Think"
Investing in your home country has its benefits; however, ignoring the rest of the growing global economy often comes as missed opportunity.
"I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money."
Arthur Godfrey, American Radio & Television Entertainer
Not all investment accounts are taxed the same! Investors should pay attention to the what and where they allocate assets to minimize their tax bill and maximize their after-tax returns.
“The most important thing about an investment plan, is that you have one you can stick with.”
David Booth, Founder & Chairman of Dimensional Fund Advisors
Investments are a tool used to achieve financial independence and specific goals. We work with our clients each year to map out an allocation among assets that meets their return target and risk tolerance.
"The investor's chief problem, and even his worst enemy, is likely to be himself.“
Benjamin Graham, co-author, “Security Analysis”
Most investors are constantly reacting to markets and trying to figure out what is coming next. This is to relinquish control to the markets! Instead, build a financial plan and a portfolio allocation that can handle whatever the markets throw your way!
Dimensional Funds & Advantis Investors