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, diversify. Use index funds to meet this guiding principle of asset allocation easily and expediently.

Identify and incorporate tax implications into the decision process. But remember that suitability takes precedence 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 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 Publishing, , 2004.


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