Remember 2008? Who could possibly forget the market collapse that led to the Great Recession? Perhaps by that point you had already suffered through the 2001 dot-com bubble-burst.
Even after those tumultuous times, many people are still riding the stocks and bonds roller coaster. It can be difficult to SWAN (sleep well at night) with a portfolio of potentially volatile investments. Imagine how much better you would sleep if you knew your assets were in a portfolio that wasn’t totally correlated to stocks and bonds and the volatility that comes with them and could potentially both maintain and increase your wealth.
Your wealth should not live and die with the downturns and upticks of the stock market.
But if your advisor stuck you with a prehistoric investment model of stocks and bonds, your heart drops – along with your portfolio value – anytime the market takes a tumble. You’re ready to escape the volatility and mitigate the risk in your portfolio, but you’re not sure where to turn. Everywhere you look, it’s the same approach but just packaged differently.
There is another investment approach similar to the likes of the Yale Endowment and other prestigious endowment programs. In this model, private investments handily outnumber (and outperform) the public markets.
Diversification through best-in-class investment managers in non-correlated investments is the approach that will balance risk and achieve above average returns for decades. Below is a sampling of the many different asset classes investors may have available. Private investments are in bold.
- CDs and Money Markets
- Tax Credit
- Life Settlements
- Tactical Income
- Fixed Income
- Fixed Annuities
- Venture Capital
- Private Equity Real Estate
- Business Development cos.
- Oil and Gas
- Private Credit
- Conservation Easement
- Value Add Real Estate
- Managed futures
- Commodities
- Public Equities
One of the critical components of Newton’s Laws of Prosperity is access to the professionals who manage these private investments. While institutional style investments are a cornerstone of Newton’s Laws, they are just one of several pillars of this overall wealth management strategy.
In fact, the overall wealth-planning strategy has been designed to address all five of the primary concerns that most high-net worth families contend with:
No. 1: Wealth Preservation. Investment consulting to maximize the probability of achieving financial goals. This is where institutional-style investing enters the picture.
No. 2: Wealth Enhancement. After the family investment portfolio is stabilized, attention shifts to mitigating tax liability while helping ensure the family has the cash flow it needs. Paying less in taxes leaves more money to be invested, helping these families meet more of their financial goals.
No. 3: Wealth Transfer and Estate Planning. The smoothest, most tax efficient way to pass on assets to the loved ones and intended heirs.
No. 4: Wealth Protection/Asset Protection. Protecting accumulated wealth from creditors, litigants, potential lawsuits, and catastrophic loss.
No. 5: Charitable Giving. Fulfilling charitable goals in the ways most beneficial to their families and the causes they care about.
Newtons Laws of Prosperity was also created for entrepreneurs and successful business owners-high-net worth individuals, perhaps like yourself, whose attention is focused on their business, where their assets are tied up. You often have neither the bandwidth nor the expertise to manage your net worth in ways that both mitigate risk and maximize your wealth and business assets.
As a business owner, you are probably building your business to the point where it can be sold profitably. That’s your retirement plan and legacy. However, proper planning can’t wait until the day before you sell. If you don’t want to give up most of the profit from selling your business to the taxman, you should plan for the sale five to 10 years before it happens.
Similarly, you don’t want to create a successful business only to have a nuisance lawsuit or similar catastrophe take it away from you. Once your business has stabilized, we advise you to diversify and transfer your wealth and assets from your business to your personal estate with guidance from tax and legal professionals.
Creating the perfect outcome is a function of sequencing-combining-timing of the right investments and strategies that we have in our quiver as a result of employing the Newton’s Laws of Prosperity.
