There isn’t any singular formula that works across the board. However, there are certain axioms that create a robust  portfolio for years to come. Portfolio allocation using a diverse mix of investment products that align with your risk tolerance and long-term needs is a good starting point. Though high-risk stocks may yield higher returns at certain times and under certain conditions, the sound strategy is a balanced, diversified portfolio that evolves over time. The 6th Avenue Team believes in a holistic, tax-efficient approach to investing that seeks to  mitigate risk and optimize asset growth  consistent with investors’ long-term goals.

There isn’t any singular formula that works across the board. However, there are certain axioms that create a robust  portfolio for years to come. Portfolio allocation using a diverse mix of investment products that align with your risk tolerance and long-term needs is a good starting point. Though high-risk stocks may yield higher returns at certain times and under certain conditions, the sound strategy is a balanced, diversified portfolio that evolves over time. The 6th Avenue Team believes in a holistic, tax-efficient approach to investing that seeks to  mitigate risk and optimize asset growth  consistent with investors’ long-term goals.

The Best Investment Portfolio is Balanced

There are different approaches to investment strategy :

·  Capital Preservation Strategy – This shortest, safest investment strategy aims to prevent  loss with Treasury bills and certificates of deposit. Older investors looking to maximize current financial assets without taking risks may prefer this method, though it will not yield much capital growth.

·   Current Income Strategy – If you need most of your money sooner rather than later, you may focus your efforts on identifying investments that pay above average distributions. You can still include a broad range of allocations across the risk spectrum, but opting for steady dividends and interest will pay consistently, though at lower amounts than a riskier long-term strategy.

·   Balanced Investment Strategy – Though “riskier” than capital preservation or current income strategies, hands down, a balanced investment strategy is the best investment portfolio for investors looking five or more years into the future. If you’ve not yet retired and you have a general understanding of the market possibilities, you’re in a good position to make calculated, well-informed risks that have the potential to pay big dividends in the future.

· Capital Growth Strategy – The most aggressive, risk-tolerant strategy is the capital growth strategy, which may include emerging technologies, small cap stocks, junk bonds, international equities, and derivatives. Though market volatility can be discouraging, modern capital growth strategies generally include up to 70% equities, 25% fixed-income securities, and the remainder in cash or money market securities to help insulate investors from catastrophe.

Depending on where you are in your life cycle, you may need to re-balance your portfolio to suit your current needs.

What Should a Balanced Diversified Portfolio Include?

 A common piece of advice you’ll hear from millionaires, Nobel Prize laureates, conservative portfolio managers, economists, and Main Street investors alike is to DIVERSIFY, DIVERSIFY, DIVERSIFY! You can do a whole lot with a simple portfolio of three to 11 funds. Starting with a modest portfolio of three low-cost, no-load index funds diversified across the Wilshire 5000 stock index, the global stock market index, and the total bond market index can give you a hand in more than 10,000 specific stocks and bonds.  

A balanced diversified portfolio includes a mix of investments across broad asset categories:

·  Stocks – Owning part of a company can be great if your company performs strongly and consistently, but can be problematic if profits shrink suddenly due to a number of complex market forces.

·  Bonds – Lending money to banks in exchange for “I.O.U.” interest for a fixed amount of time can present less risk, but for more modest returns than equities.

·   ETFs – Exchange Traded Funds are investment products that can achieve greater desired level of diversification across industry sectors. These baskets of securities can be bought or sold on a stock exchange and traded throughout the day. The low fee structures, greater liquidity, and tax efficiency make them the ideal choice for many investors.

·  Mutual funds – Mutual funds pool together resources from multiple investors to buy baskets of stocks. Mutual funds are generally less volatile.  For those just starting out, mutual funds may be the best way to grow capital over time.

· Cash – You may not think of the money in your checking and savings accounts as “investments,” though they technically are, and maintaining a certain percentage of a portfolio in cash or cash equivalents is an important part of a balanced portfolio.

The saying “Don’t put all your eggs in one basket” is very relevant to the world of investing. You can further diversify among a mix of large-cap, mid-cap, and small-cap stocks in different sectors. You may choose to diversify by market capitalization, stock sector, bond maturity, credit quality, geography, and duration.

For many investors, diversification  should be considered an important factor when building a portfolio, though what that means depends upon the individual’s risk tolerance, goals, and preferences.  Call The 6th Avenue Team and work with financial advisor who is firmly committed to understanding where you are now, where you want to be, and helping you get there with a carefully considered, diverse portfolio.

 

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Adam Janovic

Senior Director

Thomas P. DiTosto

Senior Director

The 6th Avenue Team Investment Philosophy is built upon a holistic, tax efficient approach to achieving your long-term financial goals.

The 6th Avenue Team Investment Philosophy is built upon a holistic, tax efficient approach to achieving your long-term financial goals.

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