Managing Your Portfolio

Some managers prefer to add flair to portfolio management by taking unnecessary risks. Simply put, that’s not our approach. We use Evidence-Driven Investing™ principles to manage your portfolio, supported by a team that purposefully applies continuous monitoring, rebalancing and tax management. This is done with significant discipline—regardless of market, economic or political news.

Our strategy may sound boring—but we prefer it that way. We never buy-and-forget. We strive every day to deliver fewer surprises and more support as we take control of your portfolio together.

Managing the Emotions of Investing

As you start your investment journey with your advisor, you’ll likely feel excited for the future. As markets oscillate, however, we know many investors experience emotional cycles. Even the best investment strategy is moot without the discipline and conviction to stay invested through rough market patches.

That’s why we say good investment outcomes come from marrying a good strategy with predictable behavior. This is done to anticipate some of the inherent emotions—from excitement to fear to relief—coming from market cycles that can otherwise affect better decisions.

The Roller Coaster of Investor Emotions

Greatest Potential Risk Greatest Potential Opportunity Optimistic Excited Elated Concerned Nervous Alarmed Frightened Relieved Optimistic “Time to re-evaluate.” “Time to sell.” “This is only temporary.” “Time to buy.”

Preparing for the Rough Patches

At the beginning of our journey together, we set an Investment Policy Statement that will guide how we respond to different market environments. Because, as history shows us, market declines are not uncommon.

The chart demonstrates that, despite the frequency of market hiccups, a long-term perspective highlights the potential benefit of staying invested. We plan for market declines, because we know that, on average:

  • One in every three months, stock markets lose value
  • Every eighteen months, stock markets decline by 10 percent or more, which is generally considered a market correction
  • Every four years, stock markets decline by 20 percent or more, which is generally considered a bear market

At Buckingham, we stick to the evidence. We don’t make changes to your portfolio based on economic, political or societal events. These events matter, so we’ve planned for their shocks. It’s part of our strategy and another reason we’re firm believers in diversification—to help manage for and withstand short-term rough patches, keeping you on track to meet your long-term goals.

Keeping Your Portfolio in Balance—So You Can Focus on What Matters

Markets move every day–that’s expected. Our job is to monitor your portfolio year-round to ensure that it stays in-line with your tolerance for risk.

  • As your portfolio moves out of balance, you’ll see us sell some of what’s done well and buy some of what’s done poorly.
  • We call this rebalancing, and it enforces a discipline of buying low and selling high.
  • If stocks have done well and have grown over pre-defined target values, we may sell stocks and buy bonds to keep your overall portfolio risk aligned.

Discover how rebalancing can manage risk.

The Process of Rebalancing

Turning Losses into Tax Breaks

Sometimes investments lose money. In fact, some may be worth less than what you bought them for. Yet, these can be used to help offset gains and limit taxes. This is known as tax-loss harvesting and its benefits are key to our ongoing strategy:

  • Identifies and replaces losing assets
  • Locks in losses to offset taxable gains
  • Keeps the portfolio in-line with targeted allocation
  • Can reduce overall tax burden

Combine Gains

With Losses

Reduce or Eliminate Tax Bill

See how tax-loss harvesting adds up during volatile markets.

Changing Your Portfolio as Your Life Changes

Life isn’t linear. That’s why, as we monitor your portfolio, we also review your plan and financial goals.

Based on your circumstances, the likelihood you will be able to meet and exceed your goals may change. As a result, we may recommend adjustments, such as savings and spending changes, to maintain a healthy probability of future success. To do this, we analyze and test the potential impact of these changes on the long-term viability of your portfolio, helping to maintain its value longer as you go through retirement.

We don’t frequently suggest changes to your portfolio. But, as your situation changes and your goals evolve, we will evaluate the impact on your plan together.

See How Different Life Changes Can Affect the Probability of a Successful Outcome

Managing Your Financial Future

As we study the financial landscape, we’re constantly observing the economic drivers and market events that impact us—keeping you informed at every step.

We don’t try to outsmart the market using tactical shifts or other trendy strategies. Relying on evidence, we design portfolios to be resilient to a variety of market environments. But this portfolio is just the beginning of our journey together. We work with you to constantly align your plan to your portfolio, using your Investment Policy Statement as a roadmap and guide.

Talk to your advisor to learn more about our approach to managing portfolios successfully.

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