It is a myth that people saving for life purposes need actively managed funds to comfortably reach their financial goals. In fact, it can be argued that actively managed funds significantly slow progress and reduce their lifestyles, both now and later, compared to efficient portfolios. Technically defined, an efficient portfolio delivers the highest return for a given amount of risk. Think of risk as the volatility of the portfolio, but more specifically, the chance of losing money at any given point in time. Risk and volatility have both practical and theoretical applications. We are hardwired to understand the practical. When we see our investments decline,
As I look back to the early years of my career as a financial advisor, I recall being driven by three powerful and distinct forces. The first was necessity. With a wife and three children completely dependent on my commissions, success was not a dream or a goal, it was a necessity.