The Perfect Portfolio

Via FundAdvice.com:

Great chefs know that it takes more than the right ingredients to make an outstanding stew. If you put everything together in just the right way, ordinary ingredients can turn into magic. In this article, Jeff Merriman-Cohen shows how the same thing is true for investing.

The ideal portfolio may be different for every investor, but that doesn’t mean there are 150 million perfect variations.

Nevertheless, based on the Suggested Portfolios on our Web site and the strategies we manage for clients, there are probably thousands of combinations that could qualify, depending on any one person’s needs.

How can an investor choose the right one?

In this article, I’ll walk through some of the steps I used when I was still meeting with clients (something that’s ruled out by my current job) for the first time. I hope this will give you some good ideas on how to put together a combination that’s just right for you.

The most important initial conversation with any new client is about risk. It’s the most basic part of investing, the topic that most of the industry (and most investors) would be happy to avoid altogether.

Let me be blunt about this: Investors who don’t understand risk cannot understand the most important decisions and choices they must make.

Read the full article here