Growing your money and protecting it aren't opposite goals. Done right, they're the same job.

Why Drawdowns Matter More Than Most People Realize

Let's say you have $100,000 invested and the market drops 50%. Then it comes back up 50%. You're back to even, right? Wrong. You are at $75,000.

A 50% loss requires a 100% gain just to break even. Losses hurt you more than equivalent gains help you and the math is not close.

Consider what happened recently in tech. Netflix was down over 60% from its highs. Amazon was down roughly 50%. Meta lost nearly three quarters of its value. Investors who were heavily concentrated in those names did not just need a good year to recover. They needed an extraordinary year. Some are still waiting.

The damage compounds in retirement in a way it doesn't during accumulation. When you're drawing income from a portfolio that's simultaneously falling, you're locking in losses permanently. I've seen this doom spiral play out, and it's ugly.

The classic example is 2022. That year both stocks and bonds got hammered simultaneously as the Federal Reserve raised rates aggressively. Target date funds got crushed from both directions. There was nowhere to hide if your entire portfolio was built on that template.

The Buffett Question

Here's what that actually means for you: if you've already won the game, meaning you have enough saved to retire comfortably, travel, help your kids or grandkids, and live the life you want, why keep taking risks you don't need to take? Chasing a couple extra points of return doesn't change your life if it works. It can absolutely wreck your life if it doesn't.

Now flip it. Let's say it does not work out. Those consequences are real and they are hard to undo.

There is a term in finance called the margin of safety. The most underappreciated force in finance is not picking the right investment. It is leaving yourself enough room to be wrong without it ruining you. Many investments fail not because the thesis was completely off, they fail because the thesis was mostly right but required everything to go exactly right. And life does not work that way.

If you're able to retire and enjoy your life and take care of your family, why put that at risk? The goal is to maintain that lifestyle, not gamble it. My job isn't to make you rich. It's to make sure you stay that way.

The Bucket Strategy

I think about client portfolios in three buckets: safety, income, and growth.

The safety bucket is cash, checking, savings, money markets. Everyday money. Liquid and boring and completely predictable.

The income bucket is bonds, dividend paying stocks, real estate, and yes in some cases annuities. Social Security is an annuity. Your CalSTRS pension is an annuity. Guaranteed income you cannot outlive is not a foreign concept, it is already the foundation of your retirement.

The growth bucket is your long term money. Equities, ETFs, investments built to grow over time and outpace inflation.

Let's say you were the worst investor in the world and put every dollar into the market right before the 2008 crash. Fast forward to today and you've nearly 10x'd your money. But look closely at why that worked: you had time. You could sit through a 50% drop because you didn't need that money next year, or even the next several years. In retirement, you don't automatically have that luxury. That's the actual problem the bucket strategy solves.

Here's a mistake I see constantly: people retire and make their entire portfolio mildly conservative, across the board, because it feels safer. It isn't, not really. You're still exposed to a market downturn, and now you've added longevity risk on top of it, because overly conservative money doesn't grow fast enough to keep up with 25 or 30 years of spending and inflation. Playing it safe with everything is its own way of running out of money.

The bucket structure means I don't have to make that trade-off. Your safety and income buckets are conservative on purpose, because that money has a job to do on a schedule. Your growth bucket doesn't have that job. It can stay fairly aggressive, not reckless, but aggressive, and be allowed to actually run. If it's volatile, or even down significantly in a given year, that's fine. That's what it's supposed to do. It has time, because the rest of your plan already bought it that time.

Our Approach

To be clear, this isn't a page about playing defense with your whole portfolio. Growing your money is just as much the job as protecting it, I just don't think those two things are in conflict the way people assume. Managing risk well is what lets your growth money actually stay invested and compound instead of getting pulled out at the worst possible moment.

I manage client portfolios using an institutional-grade asset allocation process. Instead of making gut calls on which sectors look hot or reacting to headlines, I lean on a systematic framework that continuously evaluates economic data, market signals, and risk indicators to make disciplined portfolio adjustments.

Within each asset class, the strategies are actively managed. Investment professionals, including CFAs and market technicians, are continuously analyzing what the data says and adjusting accordingly. Not once a year. All the time.

The goal isn't to chase the highest possible return. It's to build a portfolio that captures real market gains while actively managing the downside. One that captures 80% of the upside but only 50% of the downside will beat a more aggressive portfolio over a full market cycle.

There's also access to asset classes and strategies that go well beyond a typical brokerage account: structured notes, alternative strategies built to lower correlation to traditional markets, currency-hedged international diversification, and for clients who want exposure, cryptocurrency within a risk-managed framework.

Where Your Money Actually Sits

When we manage a client's investment accounts, those assets are held at Fidelity or Charles Schwab, independent, third-party custodians, not with Pace Financial directly. Fidelity and Schwab hold the assets and execute the trades we direct. We never take custody of client funds ourselves.

This structure exists to protect you. You always have direct access to your own accounts through Fidelity or Schwab, with your own statements and your own login, entirely separate from the advice we provide. It is a standard, SEC-regulated arrangement, and we think it is one worth understanding rather than taking on faith.

What This Means for a Teacher

Your CalSTRS pension is already providing guaranteed lifetime income that doesn't fluctuate with markets. That foundation changes how I think about your investment portfolio.

Because you have that income floor, your portfolio doesn't need to be built around survival. It can be built around growth, flexibility, and legacy. I build every investment plan around your full picture: your pension, your 403(b), your timeline, your goals.

Past performance does not guarantee future results. All investing involves risk including the potential loss of principal. Full disclosures are provided to every client before any investment decisions are made.