Vancouver, B.C. (November 14, 2000): The pursuit of personal wealth accumulation requires the co-ordination of several financial elements. Vancouver fee-only investment counsel Adrian Mastracci of KCM Wealth Management says, “My view is that successful wealth accumulation is a marathon, not a 100-yard dash and embraces these five cardinal steps:”

1. The first cardinal step is to prepare your written “long-term asset allocation plan”. Your game plan covers several personal elements such as when you wish to attain financial independence and retirement goals, investment time horizon, how much risk you can stand, retirement income needs, review of current investments, the suggested portfolio securities and income tax considerations. The plan is your “financial blueprint” that charts the course of successful wealth accumulation; similar to the blueprint used in building a home. It is very difficult to steer towards your milestone without it.
2. The second cardinal step is to adopt the passive rather than the active investment approach. Many have tried, including professionals, to beat the market by adopting various measures, such as market timing, only to fail in the long-term. In 1990, the Nobel Prize in Economics was awarded to three economists for their contributions to “modern portfolio theory”. They showed that asset allocation decisions have a far greater affect on portfolio returns than security selection and market timing. The same is true today.
3. The third cardinal step is to stop the preoccupation with past investment returns, benchmarks and chasing yesterday's winners. The first step is to estimate the investment base required to achieve your financial independence goal, if you are not already there, and to calculate “your” rate of return required to meet your goal. This rate becomes the minimum investment return to attain. The strategy is to achieve consistent portfolio returns. This is how you stay the course to your chosen destination.
4. The fourth cardinal step is to refrain from holding too many funds and/or individual securities. I often review portfolios that hold several mutual funds and other securities where the overlap of individual stocks is considerable. Essentially, the investor winds up owning the same stocks in many of the funds. This provides a false sense of diversification.
5. The fifth cardinal step is to understand the costs of buying, selling and holding each security. I recommend avoiding the deferred sales charges method, (paying sales fees when selling the investment), as it can adversely influence your investment decision. Also be aware of the “MER” (management expense ratio) which is the annual fee paid from within each mutual fund owned. Large MERs can reduce long-term accumulations by considerable amounts.

In summary, these five cardinal steps represent the winning recipe to personal wealth accumulation. Simply said, I apply proven business practices to the personal situation. Are you ready to adopt the winning recipe?

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.