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Do You Know – Really Know – What Your Business Is Worth?

This article explores the importance of having a formal business valuation.  Really knowing what your business is worth can strengthen your position, should you ever consider selling.

If you think you know the true financial worth of your company, a formal business valuation might change your mind.

If you’re planning to sell your business, or even if you’re just thinking about possibly doing so down the road, you’re going to want to have a formal valuation conducted. Formal valuations are often very useful in helping all parties by providing, at the very least, a solid starting point for negotiations.

  • Formal business valuations often come in lower than entrepreneurs expect.
  • There are at least six commonly used valuation methods, each with pros and cons.
  • Choosing the right method for your situation is both an art and a science.

Click the image below to read the full article:

Other notes and risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

High Quality Bonds in the Spotlight

There is an old adage in the investment world that ‘diversification is always having to say you are sorry’, as there is usually one (or more) parts of the portfolio that is a bit disappointing.  Every asset class has its day in the spotlight, for good or for bad, at some point.  

Over the past couple of years, shorter-dated, high-quality bonds that constitute strong defensive assets have delivered low returns and have had a finger pointed at them, by some.  Bond yields have been at historical lows, with yields on 5-year UK government gilts at or below 1% for the past three years.  Today they stand at around 0.2% and that is before the impact of inflation.  It is understandable that investors find low yields frustrating, but one needs to look at the bigger picture.  Bonds sit in long-term portfolios predominantly to provide some stability at times of equity market turmoil.

In the face of these low yields, investors have had two straight choices: accept the fact and stoically maintain the quality of their bonds; or go in search of yield by owning lower credit quality bonds and/or bonds of longer maturity.  We know that many have been tempted by the latter strategy.  We have stuck to the former to defend the portfolio at times of equity market turmoil such as this.  Remember that the lower the credit quality of bonds, the more they act like equities.

We think of yield-driven bond strategies – particularly high yield bonds – as akin to picking up pennies in front of a steamroller, which works nicely until you trip over.  The chart below looks at the performance of different types of bonds since the equity markets began to fall in February this year.  

It reveals that high-quality bonds have more or less held their value, doing the job asked of them.  As one moves down the credit spectrum to lower quality companies, returns become increasingly negative.  Owning these lower quality bonds, but with longer maturities, simply magnifies these falls (heading from left to right in the chart).  As it has always done, scared money runs from higher risks (including the possibility of default on bonds from less healthy companies) which drives yields up and prices down. It tends to move into high-quality, liquid assets driving bond yields down and prices up.

 

As Warren Buffet once said:

‘Only when the tide goes out do you discover who’s been swimming naked.’

Fortunately, your portfolio has kept its trunks on!  

 

Use of Morningstar Direct© data

© Morningstar 2020. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is no guarantee of future results.

Data set

Data label Market index used
Global Govts 1-5 Hdg Markit iBoxx GBP Gilts TR
Gilts 1-5 TR FTSE WGBI 1-5 Yr Hdg GBP
GBP Corp 1-5 TR Markit iBoxx GBP Gilts 1-5 TR
Global Corp TR Hdg GBP Markit iBoxx GBP Corporates 1-5 TR
GBP Corp TR BBgBarc Global Aggregate Corporates TR Hdg GBP
GBP Corp BBB TR Markit iBoxx GBP Corporates TR
Global High Yield TR Hdg GBP Markit iBoxx GBP Corp BBB TR
Emerging Equity BBgBarc Global High Yield TR Hdg GBP
Developed Equity MSCI EM NR USD
UK Equity MSCI World NR USD

 

Risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

 

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

 

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

Calculated Responses: One Key to Getting the Results You Want

This article covers emotions; and emotional reactions are natural. But when it comes to making money, it’s all about having a calculated response as it can make a big difference in the results.

You’re cruising down the highway when another driver pulls into your lane without warning, cutting you off. What do you feel? How do you respond?

You discover your child has a drug problem. What do you feel? How do you respond?

A competitor sues you in an attempt to ruin your reputation – and your business. What do you feel? How do you respond?

  • The actions highly affluent people take tend to be very deliberate and well thought out so they arrive at the most strategically, tactically beneficial approach.
  • Focus on the results you expect to attain – estimating the short-term and long-term consequences of particular actions you might take.
  • Seek out sounding boards – people you trust and maybe even professionals – and get their take on your proposed course of action.

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Other notes and risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

A ‘Set-and-Forget’ Investment Approach? Forget it!

Systematic, evidence-based investing often results in very little activity in a portfolio.  It is wrong to think that this is the result of a ‘set-and-forget’ strategy.  The Firm’s Investment Committee would be aggrieved at such a suggestion!  Considerable effort goes on behind the scenes to allow this state of calm consistency to exist.  The fortitude and discipline to deliver ‘not much needs to be done to your portfolio except for rebalancing’ advice, comes from a rigorous process of ongoing challenge to the status quo.  

The broad terms of reference of the Investment Committee are set out below:

 

Manage risks over time

  • The Investment Committee is responsible for the oversight of the risk in portfolios and the wider investment process.  Meetings are regular and minutes are taken, which include all action points to be followed up on. Third-party inputs and guest members – such as Albion – provide independent insight and challenge.

  Challenge the process

  • The investment process at the Firm is driven by the latest empirical evidence and theory available. It is always open to challenge. If new evidence suggests that doing things differently would be in our clients’ best interests, then we will revise our approach. The investment process is evolutionary, but change is most likely to be slow and incremental.

Review the portfolio structure

  • The underlying characteristics of the Firm’s client portfolios are reviewed, including performance and risk level attributes. Risks (asset class exposures) and their allocations within a portfolio are evaluated. Any issues are raised and resolved. Existing asset classes are reviewed alongside asset classes and risk factors that currently sit outside the portfolios.  Areas of interest are placed on a longer-term ‘watch’ list.

Review the incumbent ‘best-in-class’ investment products

  • The incumbent products are ‘best-in-class’ choices seeking to deliver the returns due to investors for taking specific market risks. Each product has a role to play in a portfolio and its ability to deliver against this objective is regularly reviewed. Any product-related issues are raised and resolved.

Screen for new products and undertake appropriate due diligence

  • Although the incumbent products were recommended as ‘best-in-class’, new products are regularly being launched. Tough screening criteria are in place against which new funds are judged. New, potential ‘best-in-class’ products face detailed due diligence and approval.  They are included only when they make the grade. Given the quality of the products already in portfolios, the threshold for replacement is high, but not insurmountable for newer products.

Reaffirm or revise the investment process 

  • The Investment Committee is accountable for reaffirming or revising the structure of client portfolios. Risk (asset) allocations and product changes are approved by the Investment Committee.  Any actions arising from portfolio revisions will be undertaken, after discussion with and agreement by clients.

The next time you open your latest valuation report, remember that despite the lack of activity on the surface, the Investment Committee continues to paddle furiously behind the scenes to allow this be the case.  In the immortal words of the investment legend and author Charles Ellis:

‘In investing, activity is almost always in surplus.’

Perhaps we should amend this slightly to:

‘In investing, activity is – except for the Investment Committee –almost always in surplus.’

Other notes and risk warnings

This article is distributed for educational purposes only and must not be considered to be investment advice or an offer of any security for sale. The reference to any products is made only to make educational points and must, in no circumstances, be deemed to be any form of product recommendation.

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. 

It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Free Up Your Life: Work Smarter, Not Harder

This article delves into how you can free up your life by working smarter, and unlock the possibilities that come with the extra time available.

168 hours. That’s how much time any of us has to accomplish our tasks and goals each week – at work, at home and out in the world.

Sleep seven hours per night and that window closes to just 119 hours.

  • Streamline how you perform tasks – especially the routine ones.
  • Automate as many steps as you can by removing the human element.
  • Outsource tasks and duties to a virtual assistant.

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Free Up Your Life

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Need for Wealth Management Before and After You Sell Your Business

This article puts a real emphasis on the importance of carefully considered wealth management and in particular, the benefits of such planning when you choose to sell your business.

Effective wealth management should be an important aspect of all stages of your career. That’s because wealth management is designed to coordinate a broad range of components of your financial life over time – from investments to estate planning, asset protection planning and charitable giving – around your needs and wants. It’s also designed to coordinate a team of experts to help deliver the financial outcomes you seek.

  • A windfall from the sale of a business can present investment management problems that must be addressed.
  • Estate planning can become a big issue if you sell your business for a lot of money.
  • Assets also should be protected post-sale.

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The Need for Wealth Management Before and After You Sell Your Business

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Déjà Vu All Over Again

Below is an interesting and insightful take on investment fads and their future, from Dimensional.

Investment fads come and go. Letting short-term trends influence your approach may be counterproductive to pursuing your financial goals.

Investment fads are nothing new. When selecting strategies for their portfolios, investors are often tempted to seek out the latest and greatest investment opportunities. Over the years, these approaches have sought to capitalise on developments such as the perceived relative strength of particular geographic regions, technological changes in the economy, or the popularity of different natural resources. But long-term investors should be aware that letting short-term trends influence their investment approach may be counterproductive. As Nobel laureate Eugene Fama said, “There’s one robust new idea in finance that has investment implications maybe every 10 or 15 years, but there’s a marketing idea every week.”

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Deja Vu Investment Fads

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Super Rich’s Three Big Fears – and How They Work to Overcome Them

Significant wealth can reduce many of life’s troubles and anxieties – but it can’t eliminate them entirely. Even the richest among us have fears.

What’s more, they often share many of the same worries the rest of us have.

But there is one difference: The wealthy take some highly effective action steps to address those worries and, quite often, overcome them. With that in mind, here’s a look at the three biggest fears of the Super Rich – those people with a net worth of at least $500 million – and some ways they combat those fears.

  • In our experience working with the Super Rich, we find that health, family and wealth concerns are among their biggest fears.
  • The right professionals can aid in overcoming concerns in all three areas.
  • A technique called stress testing can identify potential problems before they become big issues.

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Fears

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Staying on Track When Tragedy Strikes

Life does not always go smoothly. Whether you’re a billionaire, a pauper or somewhere in between, you (or someone close whom you care about) will likely suffer some type of tragedy at some point in your journey.

  • Many of the Super Rich employ strategies that help them stay the course after major life setbacks.
  • The ability to compartmentalise can be helpful in these situations.
  • Tragedy can sometimes motivate people to become even more successful.

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Staying on track when tragedy strikes

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Link Between Personal Development and Success – in Business and in Life

The legendary entrepreneur and motivational speaker Jim Rohn said it best: “Your level of success will rarely exceed your level of personal development.”. That’s true whether you’re talking about your life, your career or (if you’re an entrepreneur) your business.

  • There are six key components to engaging in personal development.
  • Make personal development a true priority by tackling it as soon as you wake up.
  • Don’t overlook tried-and-true methods to improve yourself – you don’t need the latest flashy technique in order to achieve results.

Click the image below to read the full article:

Personal Development

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.