Investment Planning

Paradigm Financial Advisors, LLC (PFA) specializes in long-term investment planning, portfolio design, and portfolio implementation for our clients. We recognize that individuals, unlike large institutions, tend to create investment portfolios over time, tend to consume parts or all of them over time, and tend also to dispose of parts of them by gifts to loved ones and/or charity during life or at death. We further recognize that investment planning doesn’t occur in a vacuum, but is a dynamic process, unfolding within the contexts both of changing objectives, and of substantial taxes on income, gains, transfers, and accumulations.

PFA is also well versed in modern portfolio theory and prudent investment guidelines that guide the management of trillions of dollars of institutional investments around the world. We combine state-of-the-art investment theory and practice with our many decades of counseling clients to deliver investment advice tailored to their objectives. We work carefully with clients to understand and prioritize their goals and then create, implement, and monitor customized portfolios to achieve these goals.


There is no one particular investment or portfolio structure that is appropriate for all individual investors. Instead, the appropriate investment and portfolio structure will depend on the amount and timing of a particular investor’s desires to spend or accumulate wealth. All investment decisions are based, therefore, on each client’s objectives. Through an objective-driven process, important portfolio construction considerations such as appropriate levels of risk and return are derived as conclusions about what is necessary or permissible to pursue those objectives.


The time period associated with a given objective is a fundamental determinant of which asset classes are properly considered for investment. Time is generally an investor’s friend since the length of the time horizon of an objective tends to reduce the risk of most long-term investments. A portfolio’s expected range of investment returns substantially narrows as the time horizon is extended. Consequently, a high priority goal with a short time horizon requires lower risk; lower return assets to pursue accomplishment of that goal. Conversely, goals with longer time horizons allow investors to assume greater short-term volatility in pursuit of higher long-term returns (thus expanding the number of appropriate asset classes). PFA always considers the time horizon of each client when selecting investments appropriate for pursuing their goals.

Core/Tactical Approach

We customize each client’s investment allocation to fit their goals and risk tolerance.  We do not use “cookie cutter” or model portfolios.  Our overall investment philosophy is to build investment portfolios that utilize both core, low cost funds for comprehensive asset allocation and tactical positions selected to take advantage of undervalued companies or certain macro level changes in the economy.

An example of a tactical position would be a recommendation to add a commodities fund to a client’s asset allocation to plan ahead for inflation that may rise due to the historic monetary stimulus programs implemented by the Federal Reserve.

We believe the core strategic allocation should represent 80 to 90% of an investors overall portfolio. This allocation should be designed to achieve specific goals or objectives from a risk and return perspective and should always be consistent with the investors overall risk profile. The core strategic allocation should include investments in low cost funds, exchange traded funds, as well as dividend paying stocks. In addition, this allocation should be rebalanced periodically in order to take sell asset classes that have risen in value and to buy asset classes that may be trading at a discount to historic valuations.

This core/tactical philosophy allows an investor to keep their long term goals and objectives at the forefront of their portfolio strategy, while allowing the investor to adjust to existing economic conditions by implementing visible tactical investment themes.

PFA believes that there is a continuum of market efficiency. At one end are efficient markets such as the U.S. large company stock market where low cost, passive investment strategies like indexing have great appeal. At the other end, inefficient markets like emerging markets may justify active management. Our philosophy allows space for both investment management approaches to co-exist in any one client’s portfolio.

No Market Timing

PFA believes that investors’ attempts to “time the market” by moving into and out of stocks to avoid periods of negative performance futile and counterproductive to the pursuit of a disciplined, long-term investment program. An overwhelming body of evidence supports the common sense notion that the odds of any one person consistently making accurate near-term forecasts of the markets’ direction are very low. Moreover, the tendency of positive equity market performance to occur in brief spurts highlights the very large risk of being “out of the market” at inopportune times. One or two unsuccessful attempts can undo much of the incremental advantage offered by equities over alternative investments.

As long-term (10 years & more) strategic investors

PFA coaches clients to accept and tolerate sometimes-painful short-term volatility to reap the performance advantages that accrue over the long term.  Further, PFA maintains a list of twenty stocks which we believe may provide better opportunities for clients to acquire good businesses which may “fit” well with their long-term plans.

Tax Sensitivity

Taxes represent a significant consideration for every long-term investor. By minimizing the amount of taxes paid annually on portfolio income and realized gains, investor’s keep more funds exposed to attractive investment opportunities targeted toward the achievement of their goals. PFA is keenly aware of the tax impacts and tax consequences of both overall portfolio structure and of specific transactions. PFA exercises care in the appropriate placement of investments within taxable and tax-deferred accounts. For example, we generally place index and tax-managed vehicles in taxable accounts and higher turnover mutual funds in tax-deferred accounts. However, tax considerations per se don’t dominate the portfolio management process. On an ongoing basis, taxes are considered explicitly as portfolios are monitored and when assets are sold. Moreover, on an ongoing basis we review all client portfolios and consider the appropriateness of tax optimization transactions such as harvesting any tax losses.

In summary, the PFA investment management philosophy is grounded in a core/tactical process that are driven by each client’s objectives, that are strategic in design, that incorporates modern investment theory and practice. We are focused on long term investment success targeted toward the achievement of clients’ personal financial objectives and peace of mind.

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