We often describe goals-based investing as a framework, an approach, or a methodology. A more complete and robust characterization would be to view goals-based investing as a discipline. Though infrequently used in investment conversation, the term discipline implies more than a single process or mathematical methodology. A discipline can be viewed as a means to
Does Risk Always Produce Reward?
The notion that more risk equals more reward is a truism of investing and modern portfolio management. So why wouldn’t a rational investor seek out the greatest amount of risk when selecting investments for her portfolio? And how might we go about setting a portfolio “risk budget” that is appropriate for achieving our specific financial
Building a Portfolio to Meet Your Personal Financial Goals
Individual investments in our portfolios may be viewed as “bundle” of different risks: term risk, default risk, equity risk, alpha risk, illiquidity risk, and leverage risk. Some investments—such as the 30-Year U.S. Treasury Bond—carry only a single type of risk (term risk), while more complex investments or fund vehicles such as venture capital funds may
Thinking About Investor Goals in the Post-Monetary Era
The Golden Age of Monetary Policy (1980-2019) has ended and the Post-Monetary Era has begun. The unique market environment which we are calling the “Post-Monetary Era” presents many challenges for investors, suggesting that investors should focus on defining, quantifying, and prioritizing their goals in order to maximize their probability of financial success. This podcast suggests
Is this the New, New Normal for Investors?
The Golden Age of Monetary Policy (1980-2019) has ended and the Post-Monetary Era has begun. Having become accustomed to the “new normal” of Quantitative Easing, ultra-low interest rates, and Fed-suppressed market volatility, investors must now learn to live with a “new, new normal” as the Federal Reserve’s COVID-19 response reset market conditions and expectations. This