Your financial advisor will begin by reviewing your current accounts. This includes IRA, 401(k), 403(b), taxable brokerage accounts, 529, and others. This gives us a holistic view of your financial situation. Your financial advisor will come up to speed on where you are and identify areas to improve.
Discussing upcoming or expected big life events with your financial advisor, like a child entering college or a planned retirement date, is the next step. Getting a sense of your yearly cash flow living needs is also something we'll do together. Your financial advisor needs to understand your long-term financial goals.
Your financial advisor will step through some scenarios to help understand your tolerance for risk, in an effort to determine what investments are suitable for you. This process is important because people will often act differently in a crisis than they anticipate. So we'll try to determine how much risk you can absorb while still feeling comfortable.
We promote simplicity and we will distill your account structure to the simplest form. Our financial advisors believe that simplicity leads to understanding, understanding leads to discipline, and discipline helps prevent behavioral changes at inopportune times (buying high and selling low).
Once your accounts are opened and linked to One Day In July, the next step is to implement your long-term investment plan. In consultation with you, your financial advisor will develop this plan by considering your various needs and constraints in terms of financial goals and desired cash flow. Your investment plan factors in your penchant for risk and aims to provide you with a suitable, maintainable long-term structure. Ideally, you want your investment plan to be one that you will not change in response to periods of euphoria or crisis, although your bond to equity allocations may shift as your personal situation changes (e.g. allocating more bonds as you approach retirement).
During the onboarding process at One Day In July we strip away, or liberate, your assets from high financial fee takers to the greatest extent possible. Taxable events can be generated at this step and must be carefully considered. While we generally recommend a diversified group of low-cost index funds for clients, there may be cases where, rather than immediately unwinding all of your initial securities positions, it is more appropriate to do so in a gradual, phased-in manner due to tax implications from embedded capital gains in your portfolio. In some rare instances, we may hold certain legacy positions indefinitely.
Rebalancing is an important ongoing process. It's not entirely formulaic; done carefully, many taxes can be avoided and returns can be optimized. Your financial advisor will examine which assets in your account need to be rebalanced and execute that for you. Studies show that 90% of the difference in returns relates to asset allocation, so it is important to keep your allocations from drifting off plan. Your financial advisor will keep you in the loop during the process.
Your life will change over time. Your goals may change, your cash needs may change, the number of kids you have may change, your marital status may change. Keep your financial advisor abreast of these developments in your life so we can work together to make sure you stay on track.
One of the benefits to passive investing is that it's, well, passive. We're not going to bombard you with "the next great trade" or world events that you have to respond to. In fact, your financial advisor will encourage you not to watch financial news or get caught up in the casino antics of the stock market. We'll help you mentally prepare for a future crisis or bubble, but otherwise hiring a One Day In July financial advisor should help you to focus on other pursuits, whether they are work, hobbies, or family.
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