Build a winning portfolio: here are some tips to help CPA investment advisers build and protect client wealth.[] Allocate assets properly. How you allocate assets, rather than which individual investments you select--or when you buy or sell them--determines the majority of investment performance over time. [] Establish your client's specific financial goals to design the portfolio that is best positioned to attain them. Make these goals achievable, measurable and realistic. [] Keep your client's ability and willingness to tolerate risk in mind. [] Understand the fundamental characteristics of each investment. [] Select an optimal asset mix--the driving force behind allocating funds to a portfolio. [] Focus on the portfolio rather than on the individual investments that are included in it. [] Diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. , diversify, diversify. Use index funds to meet this guiding principle of asset allocation Asset Allocation The process of dividing a portfolio among major asset categories such as bonds, stocks or cash. The purpose of asset allocation is to reduce risk by diversifying the portfolio. easily and expediently ex·pe·di·ent adj. 1. Appropriate to a purpose. 2. a. Serving to promote one's interest: was merciful only when mercy was expedient. b. . [] Identify and incorporate tax implications into the decision process. But remember that suitability takes precedence The order in which an expression is processed. Mathematical precedence is normally: 1. unary + and - signs 2. exponentiation 3. multiplication and division 4. over tax implications. [] Make sure your client understands that recent returns are no indication of future ones. [] Invest for the long term. Don't try to time the market. Advise clients that investing is a process, not a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. event. [] Draft an investment policy statement. Put your client's formal plan in writing. [] Remain committed to the plan mapped out for your client. Source: Adapted from Optimal Investing: How to Protect and Grow Your Wealth with Asset Allocation, Scott P. Frush, Marshall Rand Rand See Witwatersrand. rand 1 n. See Table at currency. [Afrikaans, after(Witwaters)rand. Publishing, www.frush.com, 2004. |
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