Investment planning differs from investment management in that planning is the process of preparing for management, whereas management is the act of making and overseeing said investments. This discussion therefore will focus on the process of preparing to invest rather than the investment process itself.
Let’s start with what Eunoia believes is the biggest personal investment planning mistake; separation of funds. As we move through life it’s natural, and somewhat inevitable, that we accumulate accounts held by different institutions. We may open new retirement accounts as we change jobs rather than rolling old accounts into the new. We may change banks and leave money in an IRA or investment account at the old bank. We may hear about a great broker and open a 2nd or 3rd investment account to try to boost our investment gains. At some point, we look back at all of our accounts and wonder how it got to be so overwhelming. The error however is not the number of accounts, but the lack of a cohesive plan to invest ALL of your investment assets toward the same goal(s). More often than not, we invest a 401K differently, and without any knowledge of, an IRA, which is invested differently, and without any knowledge of, a taxable account. We often consider each to have its own investment strategy with its own risk profile. We may take higher (or lower) risk in one account but that does not influence our risk strategy in our other accounts. The error is that we often fail to create an investment plan for the entirety of our wealth and instead piecemeal a strategy together by combining accounts with different risk profiles invested for different purposes.
At Eunoia Financial, we believe an investment plan begins with an overall strategy focused on accomplishing your goals. Only then, can individual investments be made to accomplish specific objectives and/or benefit from the advantages of the account type (taxable, tax-deferred, trust, etc.). We complete the circle by verifying that the combined risk and reward profile of individual accounts does not push the risk-reward profile of the original total higher or lower than expected.
It is this circular method which allows individual accounts to accomplish their particular goals AND a person’s total wealth to meet ALL of their goals.
Beyond this plan, Eunoia works with you to create a policy statement which meets your needs. This may include limits on particular security types, individual securities, cash balances and investment minimums to name just a few. The final statement allows for easy communication about the direction you would like to go, and the path Eunoia will take to get you there.
Additionally, we take actions specific to the type of accounts Eunoia manages on your behalf. For most people, taxable accounts should be invested differently than qualified or other account types.
Lastly, no matter the type of account, or balance, Eunoia’s goal is for you to accomplish your goals. The investments we make for you reflect our commitment to you.