Austec Wealth Management, LLC
John Hamel is the Managing Member at Austec Wealth Management, LLC in Elizabeth, CO and has over 20 years of experience in the finance industry. John and his team do their best work with business owners or executives still wearing multiple hats of the company fixing value gaps that would either prevent the business from selling, prevent a successful family succession or leave millions of dollars on the table at the time of sale.
Austec WM was founded on the concept that most investors’ investment experience does not follow perfectly a A-Z initial progress plan. Their mission is to coach and create harmonious relationships for their clients with specialists and experts to facilitate solutions to clients’ complex financial situations in the present and for their future financial unpredictability as it develops.
John and his team know planning early increases the probability of the business continuing as a "going concern" as the owner moves beyond the company. Often this is one of the biggest concerns of a family business succession and one of the most complicated.
BA, Finance, California State University-San Bernardino
Assets Under Management:
The Financial Soul of Austec WM
I'm rather surprised that only one other advisor has responded to your question. So I'll weigh in here with my principle views. Ray Dalio has certainly done some amazing things during his 40+ career, and it would be difficult to challenge his All Weather Portfolio recommendations. I see some very great value to his recommendations. However, one thing I believe Dalio would agree on is that nothing stays static forever and a general allocation strategy can be a great tool if used properly with circumstances.
It’s my understanding that Dalio believes in cycles of everything that make up the world, and I can agree on many points he makes. So often I see individuals invest with the idea that the stock/commodity market will be at its peak on the day they need the funds. It would be the ideal situation to have exactly the dollar amount needed on a date they required.
But often it's like catching a huge fish early in the day, throwing it back and expecting to catch several more at the end of the day. Or sometimes you have to spend more days than you thought to catch the big one. Similarly, the markets do not react the way you want or expect at the time its best for you.
A few years ago I went Elk hunting with both a deer tag and an elk tag. Early in the morning of the day before I had to leave, I saw five deer cross, rather close, in front of me. I had a decision to make. If I shoot a deer at that moment, then all opportunity for finding an elk would cease to exist as the noise from the rifle would scatter the elk for miles. So I chose to let the deer go and wait for elk. I had to return home the next day without an elk.
So what I’m trying to convey to you is that as you get closer to the required date of 10-12 years, you may likely face some difficult decisions regarding those financial allocations if your funding requirement is lacking.
Lastly your words “make as much as possible” does give you the ability to expect a negative return at the end of 10-12 years as well. And your words, “maintaining defensive enough.” does indicate that you wish to prevent total loss on your investment. To achieve both requirements, normally its recommend you first understand what your investment requirement would be at the end of 10-12 years and then build your risk/reward allocation around that expectation.
As the old principle states, “the greater the reward the greater the risk of failure.” The allocation you stated in your question has a historical balance of risk to reward performance. So ignoring all other factors, if this achieves your goals, then it may be the right investment allocation model for you. Just understand that any general allocations offered to the public are often generalized for the masses and other investment strategies exist that may perform better for your situation. As an example, I am pretty sure Dalio does not charge his fees on just that allocation.
Good luck and keep asking questions!
As the one baby asked her mother, "What the best way to hold water?" and the mother replied, "I think that Depend's"
What you pose is a difficult decision, but let's start with a couple of questions.
Would your mom need the money should the business fail?
What is the track record of the daughter on successfully starting businesses?
When individuals get to an elderly age they often have very little ways to earn back the money they lose. When we are young, we can fail, lose everything and yet still have a future to make back what we lost. The situation above would benefit the daughter with less damage compared to possible devastation to your mother if the answer to the first question were yes.
Although, if the answer was no, then consideration should be made to the answer of the second question. If the probabilities are low on success, it often will be much worse for the daughter in the long-term if the money is used to start a business.
Institutions are just the conduit to investments. The real risk is being invested in the same type of investments. Its often like a grocery store (institution) and the groceries(mutual funds, stocks, etc.). If you shop different grocery stores for food, you will often see different prices. So let's say that you heard that there was something wrong with oranges a certain Grocery Store was selling. But if all grocery stores buy their oranges from the same seller and the seller gets all their oranges from the same orchard, then it doesn’t matter what Grocery store you purchase from.
So similarly if all institutions offered GE stock, it would not matter if you bought GE at one or all the other institutions. You still would have GE stock. So the real risk to be concerned about is owning only one stock.
I would talk with your brokerage/custodian. This maybe a stoploss order and a Buy Stop Order but there are limit orders as well. But your brokerage/custodian can certainly explain how to do this. So give them a call. But you are thinking correctly to consider the risks of not letting your stock go anywhere.
If you want to be a hands-free investor I would recommend looking for a professional to first assess your risk tolerances then make recommendations. High-risk for one investor is often not the same perception to another self proclaimed high-risk investor. I've never found that high risk investing should be hands-free. Either spend the time learning or hire someone to do it for you. You can also hire an advisor to allocate for you until you feel confident to start doing handling your investments, just make sure you are upfront with your advisor with your intentions.