“There is no better teacher than history in determining the future.” – Charlie Munger

The growth rates applied to your investments are among the most critical assumptions in any financial plan. Even a 1% difference in annual return, compounded over decades, can meaningfully affect your plan’s success. That’s why it’s essential to have confidence in how these estimates are developed. There are several reasons why my long-term investment estimates differ from the approaches many advisors use, and why I believe they provide clients with a more detailed and transparent foundation for planning:

1. Length of historical data. I agree with Nobel Prize-winning psychologist Daniel Kahneman that “the single most important question (when forecasting) is ‘what is the baseline?’". In financial planning, that baseline is the historical data I use to estimate future returns. Many commonly used datasets only go back two-three decades. My estimates draw on 93 years of historical data (1929–2022) across primary asset classes, providing a longer baseline for evaluating long‑term investment assumptions.

2. Sub-asset class detail. Many advisors estimate returns for only a handful of broad asset classes, such as U.S. large‑cap stocks, international equities, bonds, and Treasury bills. I go further by estimating returns for 14 additional sub‑asset classes—including growth and value stocks, long‑ and short‑term bonds, and Real Estate Investment Trusts—using 56 years of historical data (1966–2022). This added detail provides a more nuanced foundation for long‑term planning.

3. Consistent baseline data. Many advisors base their estimates on different time periods for different asset classes, which can make comparisons uneven. My approach uses consistent, “apples‑to‑apples” baselines across asset classes, so the estimates are aligned and more comparable.

4. Real versus nominal growth rates What matters most in the long run is not the size of your portfolio in nominal dollars, but the purchasing power it represents in today’s terms. That’s why I use real, inflation‑adjusted growth rates when building financial plans. This approach helps align projections with the reality of future spending power, rather than just nominal account balances.

5. Interest rate baselines Stock returns are not strongly tied to interest rates, but fixed income returns are. Estimates based only on periods of rising or falling rates can be skewed too high or too low. By using baselines that begin and end with very similar year‑end interest rates, I reduce this distortion and provide a more balanced foundation for fixed income projections.

6. Not influenced by near‑term noise Some national firms weight their “inside view” more heavily, focusing on single‑decade forecasts. That can create a mismatch when applied to financial plans that span multiple decades. Nobel Prize–winning economist Richard Thaler has emphasized the importance of the “outside view,” which relies on long‑term historical trends. My forecasts weight this outside view more heavily, aligning with the multi‑decade horizons that matter most in comprehensive financial planning.

7. Transparency Some national firms publish return estimates without explaining how they are calculated. I take a different approach by providing clear detail about my methodology, so you can understand the assumptions behind the numbers and have greater confidence in your financial plan.

“A penny saved is 2 pence clear” – Benjamin Franklin

Franklin makes an important point about paying close attention to taxes, since saving $1 can be nearly as valuable as earning $2 after taxes. While tax returns do a good job of showing what you owed based on your past, my role is to incorporate tax assumptions into your financial plan, showing how they may affect your financial future. More transparency around taxes helps you budget and plan with greater confidence.

Examples of tax‑related details I incorporate into planning:

• Pre‑retirement income taxes (including self‑employment taxes)

• Pre‑ and post‑retirement investment income and capital gains taxes by asset class

• Pre‑ and post‑retirement impact of deductions such as mortgage interest, state and local taxes, retirement contributions, and charitable contributions

• Full 1040 tax detail transparency

• Monthly contributions and withdrawals

“The market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.’” – Security Analysis

As Kahneman explains, decision‑making heuristics are most used when people are “faced with a difficult question.” Forecasting the return of an individual stock or bond months or years ahead is exactly that kind of difficult question. Industries, companies, and products change, but the average investor’s decision process does not. This conclusion follows from more than two decades of observing how professional and amateur investors make choices, combined with my own and others’ quantitative and qualitative research.

I offer six traditional, ultra‑low‑cost, market‑cap weighted ETF portfolios across a range of risk profiles, designed to match popular stock and bond benchmarks. I also offer three Behavioral‑Factor‑Weighted (BFW) portfolios that pursue a different risk/return profile than those benchmarks. Unlike industry‑standard market‑capitalization weighting, these BFW portfolios are weighted primarily by behavioral factors.

To understand the behavioral factors, it helps to think about two broad types of investors who try to beat the market: bargain‑hunters and trend‑followers. Bargain‑hunters are drawn to stocks that have fallen sharply in the hope they will rebound, a pattern influenced by anchoring and the gambler’s fallacy. Trend‑followers chase recent winners on the expectation that momentum will continue, driven by recency bias, the bandwagon effect, and the endowment effect.

A third group of companies receives little attention from either bargain‑hunters or trend‑followers: stable, lower‑visibility businesses that aren’t obvious bargains and whose recent charts aren’t attention‑grabbing. Empirical evidence shows these companies often produce competitive risk‑adjusted returns and tend to suffer smaller declines during broad market sell‑offs.

Behavioral‑Factor‑Weighted portfolios translate predictable investor biases into disciplined, rules‑based weightings that seek a differentiated risk/return profile versus simple market‑cap benchmarks.

All investments involve risk, including loss of principal.

“Outer order contributes to inner calm.” – Gretchen Rubin

With your very busy life, it can be hard to stay on top of your personal finances. Your client portal aggregates income and spending across accounts, automatically categorizes transactions, and lets you create budgets that update in real time so you always know where you stand. The portal is ad‑free and privacy‑focused: you won’t be pushed financial products while organizing your finances, and I will not have access to your transaction or budget details. The portal also includes a secure document vault for storing important financial records and other documents.

“Life is painting a picture, not doing a sum.” Oliver Wendell Holmes

Many national investment firms require clients to invest several hundred thousand dollars or more to receive a dedicated advisor. I do not impose account or net‑worth minimums. As clinicians, you understand the importance of reducing barriers to care; I apply that same ethic to financial advice.

* Address to the Harvard Alumni Association to the Class of '61, in Speeches (1913), p. 96.