The
Henssler Financial Group follows strict criteria when selecting equity investments.
Our philosophy, The Ten Year Rule, states that any money you will not need within
10 years should be invested in high quality, individual common stocks or mutual
funds that invest in common stocks. Once you estimate the portion of your portfolio
that will not be needed within 10 years, you should consider investing these funds
in equities.
We recommend
dollar-cost-averaging (DCA) as the most appropriate approach to adding funds to
equities, and believe this approach affords most clients the best opportunity
to achieve long-term gains in the equity market. We do not believe in trying to
"time the market." We normally recommend using a 12-15 month time period to DCA
funds from cash into equities. This may mean either buying additional shares of
one or two mutual funds each month, or adding a few new stock positions each month
until your portfolio is built.
Individuals
or couples with more than $50,000 to be invested in equity investments should
consider high quality, individual common stocks, or tax-sensitive equity mutual
funds. To be properly diversified, you should own at least 10 to 16 different
stocks in at least six different industries. In taxable accounts, stocks give
the investor more control over when to realize capital gains. In all accounts,
holding stocks gives the investor more control over which industries to invest
heavily in, and which industries to avoid. Tax-sensitive equity mutual funds are
funds that attempt to minimize capital gains whenever possible. These funds can
simplify the task of choosing equity investments by allowing funds to be managed
by a professional money manager.
If
you decide to purchase high quality, individual common stocks, we only recommend
purchasing stock in companies that are at least rated A by Value Line for financial
strength, at least 2 by Value Line for safety, or at least A- by Standard & Poor's
for quality. We recommend stocks with the intent of holding them for a long period
of time. However, if changes occur in companies' situations, or if the firm's
general feeling on economic trends changes, you should be ready to make changes
in your portfolio. Low turnover in the portfolio should be the goal, but should
not prevent you from making necessary changes to your portfolio when economic
forces or news about the company may change your thoughts concerning the company's
prospects.
We recommend
mutual funds that invest in common stocks to those individuals with less than
$50,000 to invest in equities. Mutual funds provide instant diversification, and
are more cost-effective for these investors, as the commission costs of building
a diversified stock portfolio can be prohibitive when less than $50,000 is invested.
Mutual fund selections should be reviewed regularly to insure the funds still
meet your goals, management and objectives have not changed, and the performance
is still adequate. We generally recommend only no-load mutual funds.
If
you decide to purchase mutual funds that invest in common stocks, typically, we
recommend only funds that are rated four and five star by Morningstar, or funds
that employ a strategy and a philosophy that we anticipate leading to better returns
than already realized.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing.
