Tuyyo Planning Group, LLC acknowledges the two major investment management styles facing the industry today: active vs passive (or index). Before we dive into these, of equal importance is ensuring you have sound strategic asset-allocation and the composition of your portfolio is well-diversified.
In simple English...
1. Collect a lot of eggs.
2. Do not put them all in one basket.
3. Make sure you collect eggs of various sizes and colors.
4. Help the longevity of your egg collection by having different eggs which respond to the evolving seasons.
In academia, much has been written about the topic of active vs passive management. While active managers will fight tooth and nail defending their strategy, which aims to outperform a given benchmark, we found that the majority of these cannot do this consistently over time. Add to this the fact that an actively managed fund cost might be anywhere between 0.5% to well over 1%, compared to our low cost index Exchange Traded Funds (ETF) portfolios averaging 0.06% - 0.07%. This one percent difference, over many years, could be worth hundreds of thousands of dollars in lost opportunity costs, sometimes resulting in delayed retirement, or running out of money too soon.
In addition to our passive indexing approach, we are always looking for ways to lower your taxes and optimize your portfolio by using advanced tax-saving strategies through Asset-Location and Tax Loss Harvesting. Depending on your current marginal tax bracket, and time horizon, this strategy could increase your portfolio value by an estimated 0.48% each year, or 15% over 30 years.
