The financial world is complex. There are however some basic guidelines that are the cornerstone of a successful wealth creation and wealth management plan.
Discipline does not mean buy and hold forever. Discipline means having a set of guiding principles. It means having an investment rationale for owning what you own, and sticking to it. This helps tremendously in staying the course during periods of volatility. It acts as your beacon. On what basis can one decide to keep or sell an investment during turbulent markets when one does not know why they own that particular investment in the first place?
Investment markets move rapidly, evolve over time, and have become truly global. To make sense of markets requires ongoing attention. The occasional reading of headlines or twitter feeds just won't do. We stay abreast of critical information in financial markets by drawing upon a wide range of research, including leveraging insights by BMO Capital Markets experts and other industry research. Our years of deep investment expertise allow us to best distill the various pieces of information collected over time to arrive at better investment selections in our clients' customized portfolios.
There are many ways to implement risk management in a financial strategy. Building in a margin of safety in your calculations, periodic portfolio rebalancing and profit taking, as well as building a wealth creation plan based on more than just one single strategy, are a sampling of techniques that can be used to effectively manage risk.
A portfolio must be cost effective. Excessive fees can erode profits from your portfolio over time. Similar to the way compounding of profits benefit the long term value of your wealth, the opposite is true with fees. The negative compounding effect of excessive fees can be detrimental to the long-term growth of your portfolio. Fair and reasonable fees commensurate with the services received should be charged for investment advice and management.
Not all investments have equal tax treatments. A non-registered portfolio should be structured in a tax efficient way. Investors should regularly review their investments to ensure they reflect an optimal tax situation.