Retirement Answer Man

David Booth once said, ““The important thing about an investment philosophy is that you have one.” But how many people who are actively planning for their retirement actually DO have one? You’d probably be surprised to know that much of the planning side of “retirement planning” is pretty haphazard. Even among investment advisors. But I've learned that it’s vital to know what your goals are and WHY you invest in certain types of investments so that you can know if what you’re investing in will get you to your goals. Does that make sense? On this episode of The Retirement Answer Man, I’m going to walk you through “5 Ps” of a good investment philosophy that you need to consider in order to make the best choice for reaching your goals.

When it comes to investment philosophy, all we care about is repeatability.

When you assess the investment opportunities before you, there’s really only one thing you should care about in the long run. That’s what I call “repeatability.” Will the investment you’re considering continue to perform at the rate and along the line of what it’s done in the past? That’s a pretty difficult question to answer when you get right down to it. That’s why I have decided to publish this episode of the show, to walk you through the things I consider when doing my “due diligence” part of helping a client determine their investment philosophy. It takes some time, but it’s worth it to ensure that what you’re investing your money in is actually going to give you the outcome you want.

To assess an investment philosophy, look at People, Parent, Process, Performance, and Product.

When it comes to the analysis of a potential investment you need to look deeper than the returns it’s currently getting. There are a number of factors that impact that return and looking deeper will provide you the opportunity to see patterns in a number of areas that will indicate whether that return is normal, will continue or can be expected to taper off. So what should you look at to make your decision? I call them “5 Ps” - People, Parent, Process, Performance, and Product. You can hear what I mean by each of those and even how I go about assessing them, on this episode of The Retirement Answer Man.

Why it’s important to know something about the people behind an investment fund.

One of the things most investors don’t think about when it comes to assessing an investment fund is that they need to keep abreast of the goings on within the company that is managing their investment. That means knowing something about the individuals who manage the fund and make the decisions about how it will be run. If you’re able to see patterns in the behavior and decisions of those individuals, or if you see that personnel changes have taken place within the investment firm, you’re able to pay closer attention to see how or if that change is going to impact your investments. But if you aren’t paying attention in the first place, you could experience outcomes you weren’t expecting. Find out more about how to assess the people behind your investments, on this episode.

I don’t consider any investment that has less than 10 years of track record.

Your investment philosophy needs to be built on a solid set of data, clear numbers that indicate why the investment choices you make are good choices for your goals. One of the things I have made a rule of thumb for myself (and therefore my clients) is that I won’t even consider an investment possibility that has a track record of fewer than 10 years. Why? Because there’s simply no way I can tell how the investment will perform. Any recommendation I make to a client in that scenario is nothing more than a guess.... And my clients deserve better than that. On this episode, you can hear how I go about assessing an investment’s track record to help my clients attain their retirement goals.


  • [0:31] My decision to get on the “smart thermostat” bandwagon!
  • [4:30] Considering your investment philosophy decisions in the same way: not always the best approach.


  • [7:53] The 2017 Mutual Fund Landscape Report - the highlights.
  • [12:37] Taking a look at the winners in the report and how they did the next year.


  • [16:15] How DO you actually choose the right strategy for your “flexible” investments?
  • [19:30] Things to be aware of when it comes to making your decision.
  • [22:00] Most advisors don’t have a detailed “due diligence” process they use to assess investment options.
  • [23:56] Learn about the people behind the investment.
  • [26:11] It’s vital to know something about the “parent” company behind the investment.
  • [27:52] What type of process is used to manage the portfolio?
  • [32:10] What role does performance play in assessing an investment philosophy?
  • [35:04] What is the specific product you’re looking at?
  • [36:16] An example from the 1990s to show you why these things are important.


  • [38:35] Look at your holdings and write out why they make sense: Are they helping you achieve your goals?


  • [39:08] Two friends who experienced abrubt changes in their lives and how they reacted postively.


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Direct download: RAM177.mp3
Category:general -- posted at: 10:29am CDT