Retirement Investment Philosophy

What We Believe & Why

At California Retirement Advisors (CRA) we believe that investment decisions for retirement should only be made after evaluating your income needs. As you begin to depend on your savings to provide a consistent source of income for the rest of your life, an investment philosophy becomes considerably more involved than merely investing for other goals. There is no time for a second chance to earn back what may have taken you 30 or 40 years to build. Even a small mistake can mean the difference between maintaining your lifestyle or having to go back to work out of necessity. Therefore, it is critical to know a company’s investment philosophy in terms of how they provide advice and recommendations for your retirement wealth. Here’s ours:

Eight Key Considerations for a Successful Retirement Investment Strategy:

  1. 1 It is important to know WHY. Why do you own each investment? It’s an easy question, yet most people can’t answer it. Can you? Our advisors help you make sense of what you own and why. Only then can you hold the investments accountable for the results they were intended to achieve. In our opinion, there can only be one primary objective at a time to each investment you own:
  • Preservation,
  • Income or
  • Growth
  1. 2 Know your number. Your investment strategy should only be made after you have determined your retirement income needs. For instance, do you need to meet a 3%, 5% or 7% withdrawal rate? Only then can you determine the appropriate amount of risk you “need” to take and which types of investments can help you get there.
  1. 3 Be clear on risks. By communicating a very clear understanding of the embedded risks within each investment you own, you’ll be better prepared for what to expect. With a better understanding of what risks you are taking, there will be fewer surprises and a better likelihood of staying the course of your retirement investment plan. While it may sound simple, communicating risks and expectations is too often lacking in the financial industry.
  1. 4 Multiple managers. As an additional means of diversification, we believe it is important to employ different investment management strategies utilizing multiple money management firms and philosophies. We help hire some of the largest, most well-known wealth management firms on your behalf, while also hiring lesser known, boutique style wealth managers, combined with our own in-house money management strategy. This provides a large pool of talent, options and diversification far beyond what you’ll normally receive at one firm.
  1. 5 Multiple tools. At CRA, we believe that the use of multiple tools can be very helpful depending on your situation. As such, we provide access to three worlds of investing:

1) Guaranteed Investment (insured or insurance based),

2) Traditional Securities (aka Wall Street Investments) and

3) Alternative Investments.

This simple diversification approach can help reduce exposure to risk by simultaneously using multiple tools, including but not limited to:

  • Individual stocks and bonds,
  • Mutual funds,
  • ETFs,
  • Variable Annuities,
  • Fixed and Indexed Annuities,
  • Alternative Investments, and
  • Bank related products.
  1. 6 Passive and Active Strategies. We believe BOTH have their place. When we had a long-term bull market, in the 90s for instance, a tilt toward passive investment strategies may have provided better value. But during the lost decade of 2000-2010, an active investment strategy may have served you better. Not knowing exactly what will occur next, provides a good reason for owning both types of strategies as part of your overall plan.
  1. 7 Manage Costs. Investment expenses without question will have a direct impact on the bottom line of your investment returns. We believe in using low-cost ETFs and/or low-cost index mutual funds whenever possible. Judging an investment merely by cost, however, can ultimately be a very costly mistake. It is what you still keep after fees that matters most. In all cases, having a clear understanding of exactly what you are paying will allow you to determine if you are receiving value or not. If you don’t know, you should.

8 Review Regularly. With proper planning and implementation, you should not need to change your investments strategy too often. Warren Buffet was quoted saying, “An investment portfolio is like a bar of soap, the more you touch it, the smaller it gets.” We believe there is some truth to that. However, changes in your life, health, family situation and changes in the economy, tax laws, or regulations, may provide reasons to consider opportunistic shifts. This is why ongoing reviews are a critical part of owning investments and should be conducted regularly after your investments have been implemented. At CRA, we encourage an in-person meeting up to three times per year, or on an as-needed basis, to discuss these types of changes together.