Dimensional Stories: Things Really Add Up Over Time
As Dimensional Fund Advisors embarks on its 25th year of working with financial advisors, they shared with us a series of Dimensional Stories, two minute videos featuring Nobel Laureate Eugene Fama and/or David Booth speaking on the themes and insights that influence Dimensional’s way of investing. Today we share the final video of the series, Dimensional Stories: Things Really Add Up Over Time. In this video, David Booth describes how Dimensional looks for ways to add value at every step of the investment process. As has so often been the case, we find this video to be particularly congruent with our approach and philosophy, exemplified by David Booth when he says in the video:
“What we do in our conversation with our clients is explain all the different areas where we try to add value. Sometimes they wonder why you fight so hard for what might be small differences. It’s because over the long term it really adds up.”
We too believe that, in the long run, small differences really do “add up” and this belief guides us as we seek new ways to add value. Elissa and Dave often tell students – and anyone else who will listen – that financial planning has the power to transform lives for the better. They’ve learned, however, that it’s important to quickly dispel any romantic notions of financial planning as some kind of silver bullet. Instead, it’s the slow accumulation of small gains from regularly rebalancing portfolios, harvesting gains and losses, reviewing insurance policies, flowcharting estate documents, analyzing tax returns, and evaluating Roth conversion opportunities that ultimately add up to better outcomes.
And when it comes to the power of small differences, time is a crucial element. For example, every good financial decision that a young person makes is exponentially more powerful than the same decision made a decade later. And as part of our commitment to help foster good financial habits as early as possible, we recently revamped our Financial Literacy program to include four new books that we send to Client’s children, grandchildren, nieces and nephews at specific childhood and young adult milestones. We believe that, while money by itself doesn’t buy a successful life, an understanding of money is crucial to one and we’ve designed our Financial Literacy program to help our Client’s loved ones begin to build a foundation for long term financial success.
So in the end, like Dimensional, we will continue to fight hard for small differences because we know that things really do add up over time.
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