At Hyland Financial Planning we believe that markets are largely efficient so rather than try to beat the markets we use the markets to work for you. We create an investment plan based on market principles, informed by academic research, and tailored to a client’s needs. Along the way, we help clients focus on actions that add value including managing cost, maintaining broad diversification and periodically rebalancing. We encourage clients to stay disciplined through various market conditions. We build well diversified portfolios with low cost institutional mutual funds and exchange traded funds. Before we invest funds on your behalf, we will review your goals, tolerance for investment risk, time horizon, tax brackets and considerations, and any unique needs that you might have.
We will save you time by helping you create necessary accounts to reach your goals. We will automate savings or distributions from these accounts, so you can focus on what you enjoy.
ASSET LOCATION & TAX EFFICIENCY
An investor with a balanced portfolio might hold investments in both taxable accounts and tax-deferred accounts (IRA, 401(k), 403(b)). Although the investor's overall portfolio should be balanced, each account does not need to have the same asset mix. There are tax and investment expense benefits to efficient asset location. As Tax-friendly equities should be held in taxable accounts because of their lower capital gains tax rates (15% for an average investor). These lower rates may be beneficial than paying income tax (30% for an average investor) during retirement. Taxable bonds, and should be held in tax-deferred accounts. Their primary source of income (interest) is taxed according to income tax rates (30%), so it would make sense to delay realizing gains on these assets until retirement. An investor can benefit from placing all investments from an asset class in their employer plan to save on expenses.
Using various tools and personal interviews, we will determine an adequate level of investment risk that needs to be taken to reach your financial goals. We look to incorporate uncorrelated assets into client portfolios to minimize risk as much as possible for a given level of return. Uncorrelated assets are investments that behave differently in similar market scenarios, also known as diversification. Hyland uses a combination of equities (stocks), fixed income (bonds), and REITs (real estate investment trusts) of multiple nationalities, market capitalization, credit rating, and duration to maximize diversification in client’s investments
Rebalancing is about balancing risk and return. Over time some asset classes will perform better than others. Historically, equities have performed better than fixed income. This disparity can cause your portfolio to be skewed towards an allocation that takes too much or too little risk based on your risk tolerance and time horizon. Rebalancing imposes a level of discipline in terms of selling appreciated securities and buying under priced securities.