Home » Investing » Portfolio Best Practices

Portfolio Best Practices

nest egg
Investing should never be a guessing game.  Getting investments right is way more complicated than it looks.  If investors do not get it right, it can greatly detract from their financial success. Here are some key points Camarda Wealth believes are critical for our clients’ investment success:
  1. Have an investment policy statement This is a strategic roadmap to help our clients meet their goals. It is very important to match the investments to the particular goals, like building a legacy for children and grandchildren, or paying for a long and comfortable retirement.Having such a roadmap keeps everyone focused.  It crystalizes the plan and helps keep distractions from leading to poor decisions.
  2. Minimize costs Some investments can cost nearly ten times more than others that are nearly identical except for the price. [any advisors may not care or know how to dig out hidden cost information, but Camarda Wealth believes making the effort to control costs makes a huge difference in client results.
  3. Avoid commission advisors and hidden fees Not only do higher costs bleed returns, but some commission advisors may not put clients first. They are legally able to put their compensation and their employer’s profits ahead of their clients’ best results.This can be very hard to spot. Many advisors market themselves as seeming to put clients first, but this can  often an illusion. Getting a written promise that an advisor will act as a fiduciary and not take investment commissions can be an important safety net. Camarda Wealth does not take investment commissions in any form.
  4. Get honest cost and performance reporting Many advisors’ statements have a lot of ink on many pages, but little real information on investment performance. Camarda believes you are entitled to the full story:
    • A. Internal rate of return calculation – how has money done on a total dollar basis.
    • B. Time weighted return calculation – how the advisor has performed period to period – we use this to compare advisors and to benchmarks like the S&P 500.
    • C. Net of costs and fees reporting – how has the performance been after all costs. Many advisors report “gross” of fees, which can understate costs and overstate results.We believe in transparency.  At Camarda Wealth, our clients do not have to wait to get quarterly reports in the mail a month after quarter end.  Instead, through our website, they can log in and see exactly how their accounts are doing in real time.
  5. Get highly trained, expert advisors Many advisors may not have much training beyond what is needed to pass basic licensing exams.  These licenses typically only test for the minimum knowledge needed for commission sales agents. These licenses can be obtained in just a matter of weeks with no prior training. Only a small fraction of advisors have any investments training beyond licensing requirements.At a minimum, look for a firm with an  advisor holding  the CFA® credential. This Chartered Financial Analyst designation takes years to obtain and is universally respected as the global standard for investment expertise. Only a tiny fraction of advisors are CFA®s. Read more about our firm to learn  how Camarda Wealth’s management team not only includes the CFA®, but also EA tax expert and PhD (Financial and Retirement Planning) credentials.
  6. Make sure you like the investment philosophy Different advisors use a wide variety of approaches.  Some are valid, while others may not be. Some may amount to little more than selling as much of what they are told by a sales manager to sell at any given time. Others may use expensive, frequent-trading methods you may find disturbing or unrewarding.Camarda believes in a value approach that basically looks to buy good investments that are relatively cheap, thereby locking in a margin of safety and upside.
Learn more about our investment philosophy. View our Important Disclosure

Are your investments adhering to all these best practices?