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Client update
Rio Financial Advisors Investment Philosophy

	The advisor should first learn the personal risk tolerance for each client.
	Once risk is known, asset allocation is the key. Markowitz and other famous studies concluded that asset allocation is responsible for almost 90% of portfolio returns. In other words, when you use asset allocation, you may hit a lot of doubles or triples instead of home runs, but you'll sleep better because you give up only a small portion of your returns in exchange for lower risk and volatility.
	Asset allocation should include all three or four asset classes, i.e. stocks; bonds; cash; and inflation hedges (REITs, gold, TIPS). Again, the combination of different asset classes LOWERS your standard deviation or risk.
	Once an appropriate asset allocation is determined, it should be reviewed at least annually and rebalanced back to the original asset allocation percentages.
	For most equity categories, index funds over the long term will beat 80% of managed funds. The reasons for this are 1) low expenses; 2) low turnover; and 3) no timing, i.e. full participation in the market.
	For some equity categories, especially small cap growth and international funds, managers with a long history of consistent performance (minimum 5 years) can outperform index funds.
	A combination of core index funds, along with a satellite of well-managed funds can serve most investors well.
	Bond fund indexes and fixed income ETFs, both with low expense ratios, have a significant advantage over a vast majority of managed bond funds in the long run.
	Investors should have a long-term horizon, i.e. 10 or more years. Shorter-term horizons subject investors to higher risk and volatility and the high probability that short-term returns will NOT match historical long-term investment returns.
	Keep it simple. Start investing early with a proper asset allocation and stay invested. Steady returns will compound into a substantial nest egg. Time is on your side. If promises of huge returns sound too good to be true, they probably are.

“He who wishes to be rich in a day will be hanged in a year.” Leonardo da Vinci c.1500

“Money is of a prolific generating nature. Money can beget money, and its offspring can beget more” Benjamin Franklin 1748

“Time is Archimedes’ lever in investing.” Charles D. Ellis 1937

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The existence of this website should not be construed in any direct or indirect manner as a solicitation for advisory business or securities business in any states beyond the states which Rio Financial Advisors maintains registration. Securities and investment advice are offered through Rio Financial Advisors at Irvine, CA 92612. Information associated with this website is believed to be accurate, however, Rio Financial Advisors makes no guarantee to this fact and Rio Financial Advisors has no control over the accuracy of websites found through the links within.