The world is filled with risk, but the portfolio doesn’t have to be. CapStar Financial LLC is accomplished at reducing risk while getting respectable returns.
Suzette Blackburn, CapStar’s managing partner, says today’s markets are rife with high-frequency trading, and that daily up-and-down action reduces growth. Investors need more upward movement tomorrow just to get back to where they were yesterday. “The frequency of movement may be the cause of your eroding principal,” she says.
A buy-and-hold approach is subject to that sort of erosion. CapStar follows what Blackburn calls a “stay-rich strategy” with a mix of assets with and without risk, the latter including insurance and annuity instruments. “When you really understand those types of vehicles, those types of investment choices, you can use them for a risk-free return, or to grow assets safely, with very little risk.”
As for other types of investments, she likes consumables. But it’s not the gasoline, she says. The asset is the pipeline that carries the gas. Blackburn likes those things that generate income, dividends or interest. This strategy fits in today’s marketplace to preserve wealth.
CapStar does deep research, looking at every variable of clients’ expenditures – real costs of living, such as college, cars, weddings, clothing. “It’s like, ‘Somebody, please, do the math!’” she says. “We do the math.”
While people can find low-cost investment advice, Blackburn says there’s nothing wrong with paying for wealth management services that can help protect you from losing your shirt. And she tests prospective managers with the question, “How did you do for your clients in 2008?” CapStar Financial’s clients, she says, were all happy with investment performance in 2008. “We have to equate it to the real world,” she says. “We’re not using chips in Las Vegas. I’m using these dollars to buy bread at the grocery store.”
The firm is focusing, at least for now, on income. Blackburn suggests stabilizing – going for 4 to maybe 7 percent, not trying to hit it out of the park, because the growth model isn’t there now.
“You have to be nimble in your investment choices,” she says. “I think we all know intuitively there’s another 2008 out there, and it’s probably coming quick.”
1213 Ranch Road 620 South, Suite 201 | Austin, TX 78734
9600 Great Hills Trail, Suite 150W | Austin, TX 78759
512-215-9030 | www.capstarfinancial.com
Fee-based financial planning and investment advisory services are offered by PSP Financial Services LLC, a Registered Investment Advisor in the States of Arizona, Texas, Colorado and California. Insurance products and services are offered through “CapStar Financial, LLC.” PSP Financial Services LLC and “CapStar Financial, LLC” are not affiliated companies.