An investor's goals should drive their asset allocation.

The goals of an investor and their individual risk tolerances determine the allocation of capital between equity and fixed income. Each goal has its unique qualities. The time horizon, or timeline for when money is needed, the amount of the goal, timing of any additional funding, and how the funds should be distributed are all essential factors when deciding upon an investment allocation.

For example, the distribution of funds could be quarterly over a four-year period for education expenses. Similarly, the distribution of a separate goal may be monthly over a 15-year period for retirement.

The individual goals will have their unique investment allocations between equity portfolios and fixed income portfolios.

The investment allocations between fixed income and equity will change as a response to market dynamics.

Using a proprietary market analysis system, the portfolios will reduce equity exposure and increase fixed income exposure when markets expose long-term contractionary pressure.

In addition to a reduction of equity to enlarge fixed income positions, both the equity and fixed income portfolios will shift to a more conservative structure to help reduce the impact of the contractionary pressure. Once the contractionary pressure has receded and the markets expose an expansionary pressure, the fixed income and equity portfolios will shift back to their expansionary allocations, and the portfolios will return to their expansionary allocations between equity and fixed income.

These changes allow the portfolios to stay fully invested in the market while rotating between a conservative investment portfolio and an expansionary investment portfolio as market dynamics shift.

The equity portfolios will rotate through contractionary and expansionary allocations.

Contractionary investment portfolios are built to reduce the impact of a contractionary market cycle. When the equity market is showing signs of a prolonged contraction, one expected to exist for six months or longer, the equity portfolio will shift into a more defensive investment allocation. When the market is contracting, the goal of the equity portfolio is to experience less of a loss of capital. Once the equity market is showing signs of an expansionary market cycle, the equity portfolio will shift into an expansionary investment portfolio.

The fixed income portfolios will rotate through contractionary and expansionary allocations.

Contractionary investment portfolios are built to reduce the impact of a contractionary market cycle. When the equity market is showing signs of a prolonged contraction, one expected to exist for six months or longer, the fixed income portfolio will shift into a more defensive investment allocation. When the market is contracting, the goal of the fixed income portfolio is to help protect and insulate the portfolio from its equity holdings. Once the equity market is showing signs of an expansionary market cycle, the fixed income portfolio will shift into an expansionary investment portfolio.

On an annual basis, each taxable account will be reviewed for tax-loss harvesting to offset any capital gains that may have been realized throughout the year.

Asset location is a concept of placing tax-inefficient assets, high-yield corporate bonds, in accounts that are sheltered from taxation.

Tax-efficient assets such as municipal bonds should be placed in taxable accounts where applicable. Assets in IRAs are tax-deferred and are, therefore, protected from taxable events such as capital gains and ordinary income taxes. This is why placing high yielding assets in IRAs works to the investors' advantage. Also, low yielding assets can be placed in taxable accounts, since their dividends or yield are minimal and will not incur a significant tax penalty.

All trades will be made with taxation penalties in mind.

For example, if a trade needs to be placed to raise capital for a distribution, rebalance the account, or rotate asset class positions during a market cycle shift, long-term holdings will be traded first so that long-term capital gains will be realized rather than short-term capital gains. Since long-term capital gains are generally taxed at a lower rate than short-term capital gains, the ordinary income tax for the individual's highest income tax bracket, trading these long-term assets results typically in tax savings for the investor. These savings allow the investor to attain their investment goals more efficiently and effectively.

Investment accounts will be traded as infrequently as the market allows to reduce the cost of trading fees and taxes.

The assets used in the portfolios are a mix of low-cost ETFs (exchange-traded fund), both index and smart beta, and low expense ratio (under 1%) mutual funds.

The concept behind the portfolio management of each goal-driven portfolio is to reduce costs, use a tax-efficient trading method, and to reduce the number of trades to minimize trading costs.

Individual stocks and bonds are not part of the portfolio management as these assets may carry a higher risk than necessary to help the investor reach their investment goals.