Investing Is Different At Redrock
Redrock Wealth Management is a registered investment advisor firm in Las Vegas. We provide comprehensive investment management services to individuals and businesses, both locally and nationally.
We invest a bit differently here at Redrock:
- We don’t sell investments or insurance products. We create financial plans to accomplish your goals. Investments are merely a tool to help you reach your goals. Put simply, we think it’s foolish to invest without a financial plan. How would you know what investments you actually need anyway?
- We’re investment “agnostic”. Since our only compensation comes directly from our clients, we’re free to recommend the most appropriate financial tools from the universe of available options. This means our clients get the very best investing solutions possible.
- We believe in rigorous academic testing. Our investing strategy is soundly rooted in academics, not whims or fads. It’s time tested, verifiable, and designed to execute your financial plan with a great degree of success!
The 3 components to a great investment management plan
We believe it’s foolish for an investment manager to do a simple risk tolerance questionnaire and cherry pick an investment portfolio. It’s simply not enough information!
- Investment Risk Tolerance. This is the amount of investment risk you feel comfortable with (for example, what you can sleep with at night). This is very misleading however. In good markets your risk tolerance is higher, and in bad markets your risk tolerance sinks. Additionally, does it really make a difference if your portfolio dropped 15% in 2008 or 20%? On a half million dollar portfolio that’s a drop of $150,000 or $200,000 – and while $50,000 is certainly a lot of money, the fact is your investment portfolio dropped… and by a lot! Either way, you’re going to be frustrated with the paper losses. Because of this, we focus on the following two additional components.
- Investment Risk Capacity. Your investment risk capacity is the amount of investment loss you can withstand and still achieve your financial goals. For example, you may be perfectly comfortable with a 20% drop in a bad stock market, however if you’re in the de-cumulation phase of life, your financial plan may be completely derailed! In this case we must match your risk capacity with your financial plan to make sure you can withstand those inevitable market drops.
- Investment Risk Required. You may not be willing to tolerate a 20% drop in your investment portfolio, but that level of risk may be required to achieve your financial planning goals. For example, if your financial goals are so lofty your investments must produce an abnormally high rate of return, you must be willing to accept an investment portfolio with a commensurate level of risk. If you’re unwilling to accept a portfolio with that level of risk, you’ll need to either reduce your financial goals, or increase your investment savings.
So ask yourself, isn’t it vital to have an investment management program driven by your ultimate financial needs and desires for the future? Or is it OK to have an investment plan that’s thrown together based off what you think you can tolerate emotionally?