At Blue Spark, we believe in a holistic approach. Through a well-planned, diversified approach to wealth building, we aim to give you peace of mind, freedom, and security. Movement in each piece of your financial plan impacts the other pieces, so we consider all your goals as a whole. For example, your retirement strategies can impact your college savings and estate planning goals. We think the appropriate allocation of investments for your objectives and risk tolerance – combined with your timeframe for using the money – are some of the most important components in developing an investment portfolio.
Fundamental Principles
Our investment philosophy centers on the fact that markets do not always rise, nor do they fall forever. We advocate a measured approach, so you don’t take more risk than you need to in order to fund your goals, generally using a select group of low-cost actively and passively managed mutual funds and ETFs, stocks, and bonds. Using an institutional method of broad diversification, we guide our clients to invest according to their own time horizons, balancing risk and return.
We keep in mind certain fundamental principles when designing an investment portfolio. The purpose is to fund current and future financial objectives, so every portfolio must take into account each person’s goals, tolerance for risk, need for current income or liquidity, and many other considerations such as income and estate taxes. A main objective is to reduce risk through diversification. We consider risk to include volatility, the likelihood of a given investment fluctuating in value from year to year. Diversification is intended to reduce volatility.
It’s important to remember that no one can predict the future. In fact, it’s the difference of opinion that makes a market. Investment and economic experts, each one provided with the same information, often come to different conclusions. We do not suggest that we, nor that any of the asset managers that we recommend, will make the correct decision every time. We do believe, however, that studying the historic trends and relationships of investment classes can provide valuable insight.
We look at decades of market data, Nobel Prize-winning academic and company research, and the latest discoveries in behavioral finance. To achieve diversification that reduces risk, we recommend allocating assets among stocks, bonds, and real estate (and to a lesser extent, commodities and other alternative investments as well as cash). Stocks are diversified further among different size companies, and among U.S. and international. We follow a disciplined strategy through both the ups and downs of the financial markets. Many studies have shown that trying to “time” the market, whether in an up or down market, is not beneficial in the end.
Clients engage us to construct and manage their portfolios, and we choose high-caliber funds, both “smart alpha” and active, with low expenses and low turnover (resulting in tax efficiency and further reducing cost). However, there are situations when our mutual fund preferences are not available, such as in employer-sponsored retirement plans. In those cases, we make recommendations considering current offerings and the client’s overall portfolio.
We are able to fully customize portfolios based on each client’s needs. We work with your accountant to overlay those investments to achieve optimal tax management, because the bottom line is what you keep. That helps our clients sleep at night.
