Investment Overview

The following is an overview of Educational Investment’s approach to saving for the future.

Asset Allocation is the Key
Diversification. While everyone generally knows what this means, truly understanding it, and then successfully applying this principal to your portfolio, is far more difficult. Yet, strategic diversification may be the most important thing that you can do to counter the risk that comes with your investments.

Befuddled by choices, most people make investment decisions after laboriously reviewing one stock versus another or by paying too close attention to their brother-in-law’s latest tip. Yet, research has shown that 94% of your overall portfolio performance is determined by its asset allocation - mixture of stocks, bonds and cash - while less than 5% of your portfolio performance is determined by the individual stocks, bonds or mutual funds that you pick.

That is why at Educational Investments, we focus on diversification through asset allocation - using our experience to create a mix of stocks, bonds and cash appropriate to your investment requirements, the level of risk you are comfortable with, and your time horizon.

Investors Usually Do Not Outperform the Market
At Educational Investments we recognize that few investors - even professionals - will outperform the market over time. That is why we recommend investing in low cost, passively-managed baskets of securities i.e., index funds.

While the benefits of index funds is commonly accepted in most academic circles (and market gyrations over the past few years have only further bolstered this point) the majority of investors still fight the expensive battle of trying to beat a nearly unbeatable market.

At Educational Investments we let history be our guide and use a variety of index funds to build a portfolio designed to be low-cost while delivering superior returns.

Low Fees Make the Difference
Educational Investments is rigorous in choosing investments that have low fees and are low cost to operate.

And it makes a difference. For example, if you were to invest $10,000 in a low cost mutual fund versus a high cost mutual fund, after 10 years you have almost $3,000 more in savings by keeping fees low.

To offer such low fees, Educational Investments generally recommends two mutual fund companies that share its investment philosophy and goals. They are The Vanguard Group and Dimensional Fund Advisors.

The Vanguard Group is a pioneer in the field of investment management and the world-leader in index funds. With an average Expense Ratio for its funds of only 0.26%, Vanguard is a low-cost leader of the financial service world where the average Expense Ratio for all funds is 1.36% of assets under management (Source: Lipper, Inc.).

Dimensional Fund Advisors has been called “an index fund on steroids” because of its commitment to applying the latest academic research to the world of index investing. At the core of its philosophy is a commitment to low costs, as evidenced by an average expense ratio for its funds of 0.65%, less than half the average for all mutual funds.

Advice is Valuable
Educational Investments Advisory Services offers you value in two ways. First and foremost, by following our advice, you will build a low-cost portfolio designed to deliver superior returns for lower risk. Secondly, and this is a bit harder to quantify, you will gain peace of mind knowing that your investments are being professionally managed by advisors who follow the market and are equipped to offer you sound and practical advice on a regular basis.