Our investment philosophy
Financial planning isn’t just about taking better care of your money, but achieving the right level of growth the right way. This is how we approach that task here at the Wealth Doctor.
Doing what’s
best for you
Given his background in science and medicine, our founder Dr Josh Lewis has always been acutely aware of a concept called evidence-based medicine. The term was first used in the early 1990s, and is defined by the University of Oxford as:
“The conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients.”
In simple terms, it describes how medical treatments should be based on facts rather than opinions.
In 2010, Beaird Harris Wealth Management, Inc, wrote a seminal paper on what they called “evidence-based investing”:
“Science has led to tremendous advances in areas from lifesaving medical breakthroughs to instantaneous communication. However, in the past, science has provided little influence on investing. Instead of keeping pace with advancements in modern portfolio theory and historical and statistical evidence, investors and money managers have relied on conventional wisdom and flawed assumptions. How can investors sort through the vast amount of available data to maximize after-tax return and minimize risk? This paper provides a framework called Evidence-Based Investing that offers investors optimal outcomes based on compelling scientific evidence.”
This link between evidence-based medicine and evidence-based investing goes to the very heart of what we do for you here at Wealth Doctor.
Hand in hand
with EBI
Warren Buffet, one of the most successful investors of all time, once said: “To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions, and the ability to keep emotions from corroding the framework.”
This quote, and the ones shared above, perfectly sum up our own approach to investing. More importantly, it aligns with the philosophy of our chosen investment partner, EBI.
Rather than trying to “beat the market”, EBI follows a passive, evidence-based approach based on more than six decades of market data, Nobel prize-winning academic research and behavioural finance. The approach is quantitative and based on data, such as stock prices and financial information, rather than opinion or speculation.
If you’d like your money managed by experts, monitored regularly to keep it balanced and in line with your goals, you’re in safe hands with EBI and the team at Wealth Doctor.
What we believe about investing
Setting an appropriate asset allocation, according to goals and cashflow needs, is the major contributor to investment success.
It’s important to make material allocations to capture the value, momentum, size, and minimum volatility of investments, and to a lesser extent, emerging market premiums.
An investor’s risk budget should be spent on the equity content of the portfolio and the fixed income element used purely to dilute this risk. This is consistent with Modern Portfolio Theory.
Rebalancing in a timely manner, and ensuring that the investor’s emotions don’t lead to “buy high, sell low” behaviour that could destroy wealth, are both critical factors.
The highest chance of a successful outcome lies in passive (index) investing.
A proactive focus on costs in all elements of decision-making and implementation will provide substantial benefits.
Source: Vanguard’s framework for constructing globally diversified portfolios, 2021.
92.1% Variability in returns due to asset allocation (US)
7.9% Variability in returns due to active decisions such as stock picking and market timing (US)
The case for
asset allocation
A 2021 research paper by Vanguard, one of the world’s leading asset management businesses, highlighted the importance of selecting a good combination of assets when developing a portfolio.
As shown here, the research confirmed that the asset allocation decision is responsible for the vast majority of a diversified portfolio’s return patterns over time. That’s why we’re so confident this approach is the one most likely to deliver the positive results you need to fuel your ideal lifestyle.
Read reviews from real clients
You can always expect a first-rate service from us, but don’t just take our word for it.
Instead, read the excellent reviews left by our valued clients on VouchedFor, the UK’s leading independent rating platform for financial planners. Click the link to read more.
