The most relevant investment objective is to maximize the probability that your future financial objectives will be met. Improving the odds a little every year creates a high probability of success in the long run. The Seven Investment FundamentalsSM will help you avoid the dangers of market timing, stock picking, high costs, and ad hoc investment decisions. It will help you take advantage of opportunities provided by efficient capital markets. It will provide a systematic, time-proven way to reach your financial goals.

  1. Have an Appropriate Allocation to Equities
    Your allocation to equities (stocks) is the single strongest determinant of returns over long periods of time.
  2. Stay Fully Invested
    Market timing adds uncertainty, reduces efficiency and increases taxes and costs, all of which threaten your financial objectives.
  3. Keep Costs Down
    Lower costs improve long term results geometrically. We believe the total annual portfolio costs should be no more than 1 percent.
  4. Use Only Short Term Bonds
    Short-term bonds offer less risk than mid-term or long-term bonds. The risk exposure from long-term bonds is disproportionate to the small increase in return.
  5. Include Small Cap Stocks
    On average, small cap stocks produce higher returns than large cap stocks over time.
  6. Include Value Stocks
    On average, value stocks produce higher returns than growth stocks over time.
  7. Have Broad Diversification
    No single investment strategy works all the time. Increase returns and reduce risk through broad diversification applied consistently over long periods of time.