Our Investment Philosophy

The Planning for Life Investment philosophy is based on the following key principles:

• Diversification
• Disciplined approach
• Risk and return are related
• Investment experts
• Tailored portfolios

Our Investment Philosophy is used to establish and review our client's investment portfolios.

Diversification        “Don’t put all your eggs in one basket”

Diversification is a genuine way of reducing uncertainty in your portfolio by spreading investments and not taking a concentrated approach.  At Planning for Life we look to diversify in many ways:

• Across multiple asset classes;
• Across multiple investment managers;
• Across multiple securities.

This has the effect of reducing overall risk and lessens the impact that any single event can have on your portfolio.

Disciplined approach    “Avoid over-reacting”

We believe that truly successful investing requires a highly disciplined approach.  It is definitely not about chasing the highest return in any one year but is about taking a strategic approach, avoiding the all too typical mistakes that erode wealth.  The biggest mistake an investor can make is reacting to short-term performance as this can significantly destroy value.

Risk and return are related    “Smoothing out the peaks and troughs”

We understand that risk has a different meaning for each investor but, when we look at portfolio risk we consider the volatility – or the degree to which investments fluctuate.  Volatility and return are related and, in general, investments with higher volatility can be expected to have higher returns – a premium for accepting the greater fluctuations – whereas lower volatility investments are expected to offer lower returns – reflecting their greater stability.  This is called the risk/return trade off.

When we construct client portfolios we consider the risk/return trade off by balancing volatility and expected return to not only meet your goals, but also smooth out the peaks and troughs.

Investment experts    “Trust an Expert"

Many investors spend a great deal of time selecting and managing their own portfolios rather than utilising the skills of investment experts.  Often there is a cost of trying to pick your own portfolios.  A US study by research group Dalbar Inc* found that over a 20 year period ending 2005 the US share index (S&P 500) returned 12.98%p.a.  This outperformed the average investor by almost 10%p.a. which is the same as turning $100,000 into $180,000 as opposed to $1.3million. 

We believe that experts do not get caught up in the emotion of investing and have the resource capacity to undertake an enormous amount of research, detailed analysis and performance monitoring of the thousands of investment choices available in Australia.

Tailored portfolios        “Adapted specifically for you”

Planning for Life believe that portfolios should be tailored specifically to your circumstances, taking into account your goals and objectives and your views on risk and return – in fact we may need to construct multiple portfolios to account for your different objectives (e.g. buying a home in a few years and retiring in 30 years).

Implementing our Advice

To implement our investment philosophy, Planning for Life has created a series of centrally researched and maintained portfolios.  Each portfolio has a strategic asset allocation and is designed to give access to a well diversified investment solution with good risk control and a well balanced mix of assets, managers and securities.  

* Dalbar, Inc (2005) 2005 Update to Quantitative Analysis of Investor Behaviour Report.