In this show Jason and Alex provide listeners with a high-level process for building an optimal portfolio. They educate listeners on the importance of understanding and applying behavioral science and factors to this process. Jason and Alex bring to light how important discipline is to investor success. Success in investing requires having a disciplined investment philosophy, and continuously working to improve it. Understanding behavioral finance and factors are vital to this.Jason and Alex discuss some types of behavioral mistakes investors typically make. They highlight regret, due to the importance of freeing investors lives of unnecessary stress and investment mistakes. They discuss how behavioral finance shows people should control the things they can and ignore the things they can’t control.They then educate listeners on what factors are, and share examples of types of factors. Successful investors need to determine which factors have persistent higher probabilities of having better performance, based on long term historical data.

Jason shares with listeners that factor index investing is now offered to investors. Traditional index investing is weighted by capitalization (size of business). Now factor investing is available to give investors low cost, tax efficient exposure to stocks with minimum volatility.Jason then brings the discussion back to the vital principal of starting with a financial plan before building a portfolio of investments. First the rate of return needed for a person’s goals need to be determined through a comprehensive financial plan. Only then can the optimal investment portfolio be built to achieve those goals.Alex points out there is an often overlooked easier and more successful way to manage investments through crises: prepare for the worst-case scenario before it happens.

It is important to stress test financial plans ahead of crises to have peace of mind throughout the crises. He also reminds listeners tokeep in mind, during crises, that not all publicly traded companies will cease to exist at the same time, and if they do, then we all have much greater problems.They close the show by offering listeners a financial plan and comprehensive risk analysis of their investments, both complimentary. IDA has access to a top-quality risk analysis tool. It deconstructs risk in portfolios, looking at risks to portfolios such as pandemics, inflation, etc.

In this show you will learn about:

  • The importance of understanding and applying behavioral science and factors to investment management
  • Examples of behavioral mistakes investors are prone to making
  • How factor index investing is now available to investors
  • Examples of factors in investing
  • The importance of stress testing financial plans