Principles of Good Stewardship
Financial planning is about being a good steward of your resources. Making prudent decisions with saving, spending, borrowing, investing, preparing for the future and passing your wealth to the next generation.
Good stewardship involves defining your goals and taking the right action today to achieve them. It requires patience and discipline. Additionally, we should at all times conduct ourselves in a moral and principled way, and financial decisions are no exception. This extends to the following areas:
Cash Flow & Budgeting
Retirement, Education and Goal Planning
The 6-Step Planning Process
We implement a three-stage evaluation process when considering securities for investment:
1. A Good Business
The first question we ask ourselves is do we like the business? A good business should do something, or make something that is moral, good and useful for society. The business should be differentiated and protected from competition. Management should be honest and considerate of the shareholders, employees, customers, and other stakeholders.
2. A Good Story
We prefer to invest in industries with favorable tailwinds to future growth and momentum. Ideally there should be years of support to the business from innovation, demographic trends, consumer preferences, and societal changes.
3. A Good Investment
Finally, any business needs to be valued appropriately. A good investment today is one that is made at a discount to intrinsic value. High quality investments have healthy balance sheets, earn positive free cash flows, generate high returns on invested capital, and prudently reinvest in the business to maintain their competitive edge.