Broker Check

Gary's Investment Method, basic explanation

| March 14, 2022
Share |

Quick review of my investment method:

  • Diversify among stocks, bonds, cash, and commodities.  That way not all our eggs are in one basket.
  • I use mutual funds and exchange-traded funds (ETFs are a type of mutual fund) instead of buying individual stocks and bonds for my clients.  This way we get professional investment selection and more diversification.
  • Each fund invests in a particular type of security.  For example, I use several stock funds, each handling different types of stocks (large/medium/small companies, foreign or domestic companies, etc.).
  • I choose the best-of-breed funds that are available to my clients at no commission.  Most of the best funds are available to us at no commission on the Schwab platform.
  • Each portfolio model is allocated to the various funds in the way that strikes the targeted risk level.  Moderately Aggressive models have allocations that end up being about 75% stocks and 25% bonds/cash.
  • More stocks is should get better growth, but it will probably come with more volatility.  More bonds should be more stable but probably won’t grow as much.
  • There’s Nobel Prize-winning research that guides us on how much to allocate to which types of investments to get have the desired balance or risk/reward.
  • When invested my way, clients will have 5-20 different funds in the account, each doing a particular type of investing.  I monitor it and make changes to the allocation and/or the funds when I see fit.
Share |