Efficient Investment Management

Through Efficient Investment Management, you could potentially triple the size of your retirement nest egg by:

Minimizing Expenses

Many investors pay over 2% annually in various expenses with little if anything to show. Here are some of the expenses that we work to minimize.

• Mutual fund fees. If you invest in mutual funds, you may be paying 1% or more each year to the managers of those funds. This is not money well spent because mutual funds have been outperformed by market indexes. This is why passive investing (index funds and ETFs) has become very popular in recent years.
• Trading fees. When trading, each trade can cost the client as much as $100. When you, or your investment advisor, actively trade, those fees can add up quickly. (Discount brokerages charge much less, but investment advisors frequently charge more because they can receive a return of some of that money in the form of “soft dollar” compensation, which Archer Row Advisory will never do.)
• Advisory fees. Investment advisors routinely charge 1% or more of assets. Some investment advisors also have minimum fees, which can raise their fees well above this 1% figure. At Archer Row Advisory, we work to get each client the lowest possible advisory fee.

Avoiding Common Investing Mistakes

There are two common investment behaviors that can cost clients dearly. These are poor timing and lack of tax efficiency.

Timing is everything

A seemingly good decision made at a bad time can prove costly. Common examples of this are:

• buying stocks after the market goes up (buying high),
• rotating into a hot sector after that sector has appreciated,
• selling at the bottom of a correction (selling low), and
• trying to time the market (market timing) and missing out on a bull market.

The cost of these mistakes can be high. But, the temptation to chase them is high, too, which is why so many investors and advisors make these mistakes over and over again.

At Archer Row Advisory, we don’t fall prey to temptation. We buy-and-hold and only sell when our clients’ financial needs dictate selling, not because we are guessing at the market.

Being Tax Efficient

Surprisingly little attention is paid to how taxes impact investing. But, since taxes on investment income can exceed 50%, tax efficiency can be as important the choice of investment. Minimizing the impact of taxes can increase returns substantially — and without taking any additional risk of losses.

There are two main ways to reduce the impact of taxes. First, maximizing use of investment vehicles that defer or avoid tax on investment income. Everyone can benefit from wise use of one or more of Traditional or Roth IRAs (for families with income below $189,000), Solo 401(k)s or SEP IRAs (for the self-employed), 529 plans, and Roth conversions. Archer Row Advisory’s clients optimize the use of these vehicles.

The second way to reduce tax impact is by making investment decisions in light of tax consequences. This includes:

• Harvesting tax losses in down years can reduce income tax,
• Re-balancing a portfolio by realizing gains in a retirement account instead of a taxable account,
• Allocating higher-return and income-generating assets to retirement accounts, and
• Using less-active investment managing in taxable accounts.