How we build a Winning Portfolio

• Step 1  Start with a basic portfolio used by most institutional investors with a mix of 60% stocks (S&P 500) and 40% bonds (long, intermediate and short term).
   

• Step 2  Replace the bonds with shorter-term bonds with maturities less than 2 years. Shorter term bonds typically reduce your risk without affecting total return. Longer maturity bonds have more risk.

• Step 3  Add global diversification by reducing the S&P 500 portion of the portfolio and adding international index funds representing markets in different countries that don’t move in unison with each other. This creates Dissimilar Price Diversification.

• Step 4  Add small company index funds representing international and domestic markets. Dissimilar Price Diversification occurs between small and large cap stocks.

• Step 5  Further diversify the portfolio by adding high book-to-market strategies where stock values are low relative to the company’s book value.

• Result:  By following these steps, Strategic Index Money Management (SIMM) has been able to add between 5 and 6 % to annual returns and actually lower the volatility (up and down movement) when compared to the basic 60% stock and 40% bond portfolio.

SIMM applies Modern Portfolio Theory by choosing the right mix of index funds utilizing millions of computer calculations to scientifically design a portfolio based on the client’s risk tolerance, time horizon and objectives. To allow proper asset allocation, the minimum balance for SIMM portfolio investing is $30,000.