Our Approach

Our approach: In the modern world, success is often equated with wealth, but it’s time to rethink our relationship with money. Instead of considering it the ultimate goal, we should view it as a powerful tool to achieve our dreams and aspirations.

At Able Wealth Management, we firmly believe that financial empowerment is the key to a brighter future. This approach involves working closely with our clients to understand their desired future state – the definitive version of their life in the years to come. This understanding provides direction and purpose and enables them to make well-informed decisions and prioritize actions. Life is unpredictable, and your financial plan must adapt to guide you toward decisions that align with your values and objectives. With our expert guidance, you will be empowered to make the right choices to help you reach your goals.

Our Approach Able Wealth

Core values

The guiding principles that shapes us

We minimize expenses while maximizing returns, ensuring our clients receive value-added services without charging high fees.

We promote transparency, providing realistic expectations and informing clients candidly about their financial plans.

We prioritize clear, timely communication, ensuring that our clients remain informed about their investments and how their money is managed.

We foster a collaborative culture, tapping into diverse skills and expertise to provide the best possible solutions for our clients.

We go beyond understanding our client's needs and goals by empathizing with their financial journey, recognizing the emotional aspects of wealth management, and striving to become their trusted financial ally.

We act only in our client's best interests, upholding the highest ethical standards as trusted fiduciaries.

We believe in financial principles that are universally applicable while also creating personalized strategies for each client and organization, understanding that their needs, goals, and objectives are unique.

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Volatility Drag

Volatility drag, often unnoticed by many investors, plays a significant role in the performance of investment portfolios, especially in markets characterized by high volatility. Understanding volatility drag is crucial for making informed investment decisions and managing long-term investment performance.

Understanding Volatility Drag

Volatility drag refers to the negative effect of investment volatility on compound returns over time. It occurs because losses have a more significant impact on portfolio value than gains of the same magnitude. For example, if an investment loses 10% one year and gains 10% the next, the investment will not return to its starting value due to the mathematical asymmetry between gains and losses. This phenomenon underscores the importance of minimizing large fluctuations in investment value to protect long-term returns.

The Mathematics Behind Volatility Drag

The mathematical principle underlying volatility drag is relatively straightforward but profound in its implications for investors. The key concept is that percentage gains and losses are not symmetrical. A 50% loss requires a 100% gain to break even, not a 50% gain. This asymmetry means that volatility (up and down movements in price) can erode the compound growth rate of an investment, even if the arithmetic mean of the returns seems healthy.

Example of Volatility Drag

Consider an investment with the following annual returns: +20%, -15%, +10%, and -5%. While the arithmetic mean of these returns might suggest a modest positive performance, the compound annual growth rate (CAGR) would tell a different story, factoring in the volatility drag and showing a lower effective return than the arithmetic mean would suggest.

Implications for Investors

  • Risk Management: Understanding volatility drag emphasizes the importance of risk management strategies, such as diversification and the use of derivatives for hedging, to minimize significant downturns in portfolio value.
  • Investment Strategy: Investors might consider investment strategies that aim for steady, consistent returns over those with potentially higher but more volatile returns. Such strategies might include investing in low-volatility stocks, index funds, or using dollar-cost averaging to mitigate the impact of market fluctuations.
  • Psychological Aspects: Volatility drag also highlights the psychological challenge for investors who may overreact to short-term market movements. A long-term perspective is crucial for successful investing, as frequent trading in response to volatility can exacerbate the drag on returns.
  • Performance Evaluation: When assessing investment performance, considering both the arithmetic mean return and the compound annual growth rate (CAGR) can provide a more comprehensive view of an investment’s performance, factoring in the effect of volatility.

Financial Planning Fees

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  • Fees can be paid monthly, quarterly or semi annually
  • Actual fee will be determined on complexity and scope after an initial consultation
Investment Advisory Fees

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  • Fee charged on a percentage-tiered rate
  • Fee based on total assets managed
  • Fee covers services such as portfolio design, continuous monitoring, rebalancing, and personalized guidance

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