Passive & Static
Strategies
Passive management and static strategies are just as scary as they sound, but a majority of Americans' investments fall into these two categories. Passive management is not mismanagement. Instead, it applies to investments that have non-specific goals. Unlike actively managed accounts where the investment is monitored every moment throughout the day, this type of investment is monitored monthly, quarterly, semi-annually, or annually. The frequency depends on the sophistication of the plan or lack thereof. Therefore it is important to note that making investment decisions based on the results on a statement of accounts is not management, but quasi-management at best.
Static strategies are by their very nature counter-management and in many cases counter-productive. Think of this as a "buy and hold" philosophy. Many investors unwittingly believe 1) their broker is watching out for them, or 2) they are able to watch out for themselves. This may seem like a good idea until there is a serious problem. Static strategies may be appropriate for: Home mortgage, Life Insurance, Long-term Care Insurance, and Disability Income insurance. These investments are rather perpetual in nature and are not affected by economic, political, natural, or other types of influences and fluctuations.
Unless you hire a private money manager to oversee the daily activity or your portfolio, you are in a passive or static investment strategy. Of special risk and concern here are investments such as:
>Variable Annuities
>Variable Universal Life
>Mutual Funds
>Municipal Securities
>Stocks & Bonds
>Exchange Traded Funds
>Margin & Option Accounts
>Foreign Currency Accounts
Alternative
Investments
Alternative investments are regarded as investment products other than traditional investments (such as stocks, bonds, money markets and/or cash). These should never be overlooked. Although they may not apply to everyone, they must be considered.
Alternative investments include: Direct Participation Programs, Limited Partnerships, real estate and financial derivatives. Some of these are very risky -- some less risky. Many (if not most) alternatives are secured investments and are not correlated to the stock market.
Most alternative investments cannot advertise or announce their performance under U.S. and European law. Some can only accept investment from high-net-worth individuals or institutions. Unless your financial advisor is licensed and educated about alternatives, he/she cannot legally discuss them. This will result in your missing out on a very significant portion of the investment spectrum.
Advisors who are not licensed to write alternatives will typically dismiss your inquiry by telling you "those are much too risky for you, we don't want to even consider them." This translates to "it's time to get a second opinion." (Again, call us for referral to a specialist near you.)
Third-Party
Management
High net worth individuals, private entities, pensions and other institutional investors use the services of private, third party managers who specialize in a variety of industries. Maybe you should too. These managers usually have initial minimum investments of $500,000 to $10,000,000; which is why the general population does not know about them. We can provide access to these private third party money managers for accounts beginning at $25,000 to $30,000 and through several different financial institutions.
Third party money managers can custom-tailor their investment strategy around an individual investors' personal risk tolerance, income needs, timelines, and tax considerations. Account management must be active, not static or passive. Private money managers can frequently move all of their investment positions to cash, at a moments' notice, in times of sharp downturns in the markets. Mutual fund managers cannot. The point of this expertise is to protect the principle first and foremost.
Most importantly, this service can include the additional feature of screening your stock and bond portfolio to be sure they reflect the Christian principles and values that you profess in faith. Companies who thrive from those who engage in moral turpitude, support anti-family / anti faith-based initiatives, or are related to or contribute to companies that are, can be removed from your portfolio.
Is this important? As a Christian perhaps it is time to evaluate what your finances are saying about you. Whether or not the two match could make all the difference concerning your impact for the Kingdom. We have several different third party firms available each with billions under management and several platforms to choose from.