Most financial managers try to practice rational finance, where emotions are removed from the investment process. But at Charter, we practice relational finance as well.
Relational finance is when you invest in such a way that you don’t have to worry about the future. It means that you don’t dread the arrival of your next statement in the mail. It means that long-term goals are managed, not only by squeezing out more return, but also by managing your expenses. It may not maximize profits, but it sure improves returns.
I recently advised a couple clients who want to share their good fortune with friends and family. By structuring investments so their current and future needs are met, and by establishing a consistent plan for making gifts, we’re able to give them a way to share generously without impoverishing themselves.
Relational finance sometimes means owning a safe and boring bond when a high-flying stock could yield more. But if the bond meets your needs and you can sleep at night, the relational approach is actually the most rational as well.
Douglas R. Tengdin, CFA
Chief Investment Officer
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