Here at Modular Financial Solutions Inc. we believe that for investment success, you need a concept or framework to coordinate your investment goals with the resources you have available. This framework or investment plan must also be flexible enough to adapt to changes in the markets, the economy and your personal situation. Investment planning, like financial planning is not a single event, but is rather an ongoing process that should be monitored and adjusted as your circumstances change over time.

When we create an investment plan for our clients we use six investment principals designed to produce an investment portfolio that will not only fit their present circumstances but will also be easily adaptable to the changes in the future. These Principles are:

• Use stocks to achieve long term capital gains–Over a ten year period, stocks as an asset class have easily outperformed bonds, real estate, commodities or other even more exotic investments.
• Use stock mutual funds and Index Exchange Traded Funds (ETFs),  not individual stocks–Using a good mutual fund you receive professional money management, expertise and diversification. For the individual investor, the use of individual stocks usually results in a poorly diversified portfolio that is expensive to maintain and will most likely result in much higher investments risks due to poor diversification.
• Use cost effective mutual funds–With over 10,000 different mutual available, there are a lot of choices to make. We maintain a data base that is used to evaluate and rate over 15 different parameters for the mutual funds and ETFs we recommend.
• Diversify to control risk–Although using good mutual funds can greatly improve diversification, further improvements (and risk reduction) is possible by using a mix of different types of mutual funds. A prudent mix of large caps, mid-caps, small caps and foreign equities as well as bonds can dramatically reduce your overall risk exposure and control the volatility of your returns. This is also termed asset allocation.
• Invest for the long term, protect the short term–Although it is prudent for long term growth, your short term goals should also be accommodated. A need for emergency funds can easily derail the most carefully thought out investment plan.
• Include tax consequences–Although it is usually a mistake to buy or sell an investment based solely on the tax consequences, it is prudent to incorporate some fundamental tax planning in your investment approach. Investments that produce long term capital gains, but little current periodic interest are usually more appropriate for after tax accounts instead of a retirement (e.g. IRA) account.