"Rules of thumb" about annual savings targets, expected returns, and future income, can be highly innacurate and lead to poor decision-making. We provide tailored cash flow modeling for our clients as a more sophisticated tool to help our clients visualize their possible financial futures.
This tool is not meant as a crystal ball, but as a planning tool. Once the model is built we are able to run various simulations for clients, showing the relative impact of various rates of return & inflation. We can also model the impact of changing annual savings, retirement date, and/or annual retirement income.
We love working with CPAs. However, hiring a CPA is not the same as hiring a CFO, and even the best CPAs are limited by the information they have and the scope of what they're hired to do.
Because we have an intimate understanding of our clients current and long-term financial situations, we tend to view things through a different lens than a CPA. As a result, we are often able to identify opportunities for tax savings & efficiencies that aren't on a CPAs radar.
We believe in Modern Portfolio Theory. We believe in math-based, data-driven investing. We believe investing should be more than blindly trusting decades-old models or relying on name-brand funds. We believe behavioral investing is real, and emotions can be dangerous.
In short, we believe portfolio management should be a process. Our process is called the Three Filter Approach and is designed to prioritize decision-making based on their overall impact on risk & returns.
The percent allocation to various asset classes is the primary driver of long-term risk and return for a diversified portfolio. Historic returns for given asset classes are not reliable indicators of future returns.
We aggregate several unique sources of macro-level research to develop weighted return projections for each major asset class. Those projections, along with volatility and correlation data, are used to develop optimal, diversified asset allocations for a given level of risk tolerance
2) Fund Selection
Once we know the percent allocation we want in a given asset class, the next decision is what to actually invest in. We have a rotating schedule by which we are continually doing "deep dive" reserach into each major asset class in order to identify the specific investments that best meet our objectives for that specific asset class.
3) Trading & Rebalancing
Hypothetical portfolios allocated 25% to each of 4 indexes: Barclays Agg Bond, S&P 500, MSCI EAFE, MSCI EM. “Active Rebalancing” example based on rebalancing to original allocation January 1 of each year, “Buy & Hold” example based on no rebalancing over time. Returns data sourced from www.wsj.com & www.thebalance.com
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels. This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. North Woods Asset Management can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein. Any charts, graphs, or visual aids presented herein are intended to demonstrate concepts more fully discussed in one on one settings, and which cannot be fully explained without the assistance of a professional from North Woods Asset Management. Readers should not in any way interpret these visual aids as a device with which to ascertain investment decisions or an investment approach. Only your professional adviser should interpret this information. These materials contain references to hypothetical performance results. These are presented for the purpose of demonstrating a concept or idea, and not intended to be interpreted as representing any specific performance or outcome. Such representations are not intended to substitute for individual investment advice, even if the case study appears to have similar characteristics.