Our Investment Philosophy
At Incline Financial Planning, we specialize in crafting investment portfolios using sophisticated yet straightforward strategies. Our approach begins with the fundamental belief in the efficacy of markets over the long term in determining security prices. We complement this belief with a meticulous assessment of current market conditions and opportunities, adjusting portfolios accordingly within defined parameters to safeguard and attain the expected returns integral to the financial planning process. Here are some foundational beliefs that inform our strategies:
ASSET ALLOCATION
We offer a diverse range of portfolios tailored to meet varying levels of risk tolerance and required rates of return for our clients. We firmly believe that equities (stocks) serve as the primary vehicle for outperforming inflation over the long term, while fixed income (bonds) act as stabilizers to moderate portfolio volatility.
We adhere strictly to each of our models' stated equity/fixed income ratio, with adjustments made only within the parameters set by our rebalancing algorithm. For instance, we will never consciously trade a 90% stock / 10% bond model down to an 80% stock position.
In our most conservative portfolios, we strategically include specific asset types to safeguard clients' purchasing power against inflation while accommodating their low-risk appetite.
DIVERSIFICATION
In today’s interconnected global economy, we acknowledge the abundance of profitable opportunities across various countries. Our strategy emphasizes diversification across all asset classes and categories to achieve market-equivalent returns while managing risk and minimizing costs.
STOCKS
Our equity allocation (stocks) follows a 75% US / 25% non-US distribution.
→ Within each component, we maintain a market-weight position, including small and mid-cap stocks.
→ The non-US segment includes both developed and emerging markets to attain a market weight position.
BONDS
Our fixed income allocation (bonds) primarily consists of short- and intermediate-term investment-grade securities.
→ Non-US bonds comprise 25% of the portfolio.
→ To offset the real return potential lost in fixed-income allocations, we incorporate inflation-protected bonds.
Equity Philosophy and Rationale
We advocate for maintaining a globally diversified portfolio that encompasses both developed and emerging markets in a cost-effective manner. Additionally, we emphasize covering the size- and style spectrum to mitigate prolonged periods of underperformance attributed to investment style cycles.
LOW COST
Minimizing costs is widely acknowledged as a crucial strategy to maximize portfolio returns. Many of the asset exposures we target are accessible through diversified, passive investments like index funds managed by reputable firms, often in the form of Exchange-Traded Funds (ETFs), at exceptionally low costs.
DISCIPLINE
Our portfolio construction reflects extensive research to create a logical and transparent investment approach that instills confidence in investors for the long term. We maintain a disciplined investment strategy, avoiding frequent portfolio changes without thorough and deliberate rationale. Our decisions are never driven by knee-jerk reactions or panic during times of crisis. We expect our investors to share this disciplined approach. As true advisors, we aim to mitigate irrational behavior and emotional responses that could undermine the success of well-crafted plans. At Incline Financial Planning, we typically make portfolio adjustments no more frequently than quarterly under normal circumstances.
In conclusion, at Incline Financial Planning, our mission is to provide clients with investment portfolios crafted with sophistication yet grounded in simplicity. Our emphasis on low-cost, disciplined investment strategies reflects our dedication to maximizing returns while managing risk. As trusted advisors, we stand by our clients, guiding them through disciplined decision-making processes to achieve their financial goals.
