Free Wealth Management Guide Building An Effectively Diversified Investment Por

Building an Effectively Diversified Investment Portfolio An Educational Resource From Solid Rock Wealth Management By Christopher Nolt, LUTCF, Registered Principal, Investment Advisor Representative Introduction How you invest your money can mean the difference between living out your dreams or not. That is something to take very seriously. Unfortunately, the amount of information on investing today is overwhelming and confusing, making the decision of how to invest wisely very difficult. With all of the different investment products, strategies and information, one has to wonder; “is there a proven way to invest my money today? A prudent strategy that will give me a good chance of attaining my long-term investment goals?” The answer to that question is YES and in this Wealth Guide we will show you that strategy. With the Nobel Prize winning concepts of Modern Portfolio Theory as our guide, you will learn a step-by-step process for constructing an effectively diversified investment portfolio using low-cost asset class mutual funds. You will see how over the last forty years this portfolio accumulated more than twice the wealth of a portfolio allocated 60% to the S&P 500 stock index and 40% to the Barclay’s Government Credit bond index. If you are serious about achieving your long-term financial goals, this Wealth Guide could be one of the more important things you ever read. Academic Research It’s important to consider the source of information that your investment strategies are based upon. Unfortunately, many sources have an agenda behind them. The financial media, Wall Street and the investment brokerage industry disseminate information that is often designed to sell advertising and publications, to move money and to generate fees and commissions. Once you understand that these goals don’t line up with your best interests, you will learn to ignore much of what you hear from the media and Wall Street. Another source of investment information comes from Academia. Academia refers to the people and institutions dedicated to the activities of teaching and learning, including research and discovery. This would include schools, colleges and universities. Over the past 60 years, academic research has discovered and established the most effective way to manage money. By following the steps outlined in this Wealth Guide, you can benefit from their research. Modern Portfolio Theory In 1990, Harry Markowitz, William Sharpe and the late Merton Miller won the Nobel Prize for economics for their research on creating investment portfolios. They developed a mathematically optimal portfolio. Based on a study of historical investment performance, they re-created the best combination of asset classes in a portfolio. Markowitz called this mathematically correct portfolio an efficient portfolio. His method sought to achieve maximum returns with the least amount of risk/volatility as measured by standard deviation. The scientific system Markowitz pioneered and which won the Nobel Prize came to be known as Modern Portfolio Theory. This investment strategy is now accepted worldwide as an authoritative blueprint for investing. Standard Deviation Standard deviation is a very important concept of investing. Standard deviation measures the volatility of an investment’s return over time. An investment with returns that vary greatly will have higher standard deviation. In 1