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Robert Schumann

Robert Schumann

Cambridge Financial Advisors in Salida, Colo.

Robert Schumann's current investment strategy is pretty straightforward: He mixes a laddered bond portfolio of DFA Funds with a proprietary index stock fund strategy.

The laddered bond portfolio is constructed with zero-coupon U.S. Treasuries strips. These bonds offer no interest payment; investors receive payment only at maturity. They are "safer than Social Security because government can't change the rules on Treasury strips," Schumann says. A sliver of the portfolio matures every year, so the 15-year lifespan of the bond ladder gives clients extra peace of mind. If clients don't have a pension, about 40% to 55% of their assets will go into the bond ladder, often within a tax-sheltered individual retirement account. The rest of the portfolio is invested in DFA Funds and a propriety U.S. index fund, Cambridge Index Strategy. The 50-stock portfolio is designed to mimic three major market indexes: the Dow 30, the Nasdaq, and the S&P 500. It uses tax harvesting to outperform the benchmarks.