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Financial Strategies for Families
 

Financial Strategies for Families

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Officially titled, "Financial Planning Strategies for Women & Families" - Barry Mendelson gave this presentation to the East Bay chapter of American Society of Women Accountants in February.

Officially titled, "Financial Planning Strategies for Women & Families" - Barry Mendelson gave this presentation to the East Bay chapter of American Society of Women Accountants in February.

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  • Once you complete this letter and fill in the blanks – then you probably have a pretty good plan in place. Don’t feel bad if you can’t answer many of these questions – most people can’t. But the more you can fill, the better off you’ll be.
  • A rule of thumb is to expect to spend about 80% of pre-retirement expenses during retirement. But the first couple years are a big adjustment – and often set the tone for the remainder of retirement. By that I mean, quite often we see people or a spouse who is quite busy while working – when they retire – they fill their time with other activities – money spending activities, such as travel, spending, and especially dining out. This is where having a budget (just acknowledging where your money goes) helps.
  • A word about average life expectancy, at age 65 your life expectancy, as a woman is 88 and as a many is 85. However, as a couple, there is almost 20% probability that one of you will to live to age 95.
  • On the left you have Plan A - Life is Good. On the right you have Plan B – where you are willing to accept retiring later, spending less, downsizing moving to a lower cost area, or move-in with your kids. The point is, you really need to talk about Plan B and prepared to live with it because there could be an outlier.
  • Don’t underestimate the power of starting your savings early.
  • There’s a lot of information contained on these slides, but we’re going to focus on some key themes and data points. Here on the two charts on the left, you see the YTD performance of the S&P 500 at 3.9% and a return of 11.3% for third quarter. What’s noteworthy is that four times this year, the S&P 500 has dipped into negative territory for the year and four times it has recovered. And whereas we considered much of the volatility of 2008 and 2009 due to deleveraging, we consider this year’s volatility more a function of uncertainty – that is uncertainty among investors. Looking at the chart just below it, the S&P has returned a remarkable 74% since it’s low on March 3, 2009. Yet is still 22% off it’s peak on October 9, 2007.
  • Last column – 10 year cum return of various asset classes. In ’90s, every time you bought equities on dips, you made money. Not true in ‘00. but in fixed income, just about every time you buy a bond, you make money and it reinforces you to buy more – exactly the opposite of what you should be doing.
  • Commodity prices to move up, driven by growth in EM infrastructure demand. In general 5% is considered a prudent allocation. Gold – speculation. Not a use asset, not driven by inflation, but maybe fear. Back in the early ‘80s, gold lost 60% of its value in just a few years and has yet to recover in real terms. Oil peaked at over $130/barrel the summer of 2007 and had you bought back then, you would be out about 40% of your money since then.
  • Markets throughout the world have a history of rewarding investors for the capital they supply. Their expected returns offer compensation for bearing systematic risk—or risk that cannot be diversified away. An efficient market or equilibrium view assumes that competition in the marketplace quickly drives securities prices to fair value, ensuring that investors can only expect greater average returns by taking greater systematic risk in their portfolios. This graph documents compounded performance of fixed income and equity asset classes from 1926 to 2009, based upon growth of a dollar. It shows that US equities have offered higher compounded returns than fixed income investments. Within the equity asset classes, small cap stocks have outperformed large cap stocks, resulting in higher returns and greater wealth accumulation. Capital markets reward investors based on the risk they assume. Rather than trying to outguess the markets, investors should identify the risks they are willing to take, then position their portfolios to capture these risks through broad diversification in the capital markets.
  • This graph documents bull and bear market periods in the S&P 500 Index from January 1, 1926 to March 2010. The market cycles are identified in hindsight using historical cumulative daily returns. All observations are performed after the fact. A bear market is identified in hindsight when the market experiences a negative daily return followed by a cumulative loss of at least 10%. The bear market ends at its low point, which is defined as the day of the greatest negative cumulative return before the reversal. A bull market is defined by data points not considered part of a bear market. The rising trend lines in blue designate the bull markets occurring since 1926, and the falling trend lines in red document the bear markets. The bars that frame the trend lines help to describe the length and intensity of the gains and losses. The numbers above or below the bars indicate the duration (in calendar days) and cumulative return percentage of the bull or bear market. Keep in mind that this graph does not show total compounded returns or growth of wealth since 1926. Once the cycle is established in retrospect, the first day of that cycle resets the performance baseline to zero. Investors may draw a number of lessons from this graph. First, since 1926, bull markets in the S&P 500 Index have lasted longer than bear markets and delivered price gains that are disproportionately greater than the bear market losses. Second, fluctuating performance within each trend illustrates that volatility and uncertainty occur even within established market cycles: bull markets may have short-term dips, and bear markets may have short-term advances. The immediate trend is not readily apparent to market observers, and in fact, may become clear only in hindsight. This illustrates the difficulty of accurately predicting and timing market cycles. Finally, the graph suggests the importance of maintaining a disciplined investment approach that views market events and trends from a long-term perspective. Investors who react emotionally to short-term movements are at risk of making ill-timed decisions that compromise long-term performance.
  • This is what happens to volatility over time. Over the last ten years, gold has returned 15.5% a year on average and over the last 20 years, 5.2% year on average and over the last 30 years just 2%/year. No five year period in the last 60 when a 50/50 portfolio last money during a five year period. Per the chart in the upper right corner, 10.8% may not seem that much greater than 6.2%, but it compounds to create over twice the wealth over a 20 year period.
  • Don’t overestimate your ability to be a disciplined investor. Unfortunately, in 2007, 2008, 2009, many equity investors abandoned their strategies – went to cash because they couldn’t take any further losses in their investment portfolios. And subsequently, the rode the markets down and didn’t participate in the recovery. How can the average investor have earned 2.3% when every investment here has appreciated in value? The reason is because investors tend not stay put, not disciplined, chasing returns of buying a stock or mutual fund that has done well and switch to that. They tend to do the opposite of what works – and that is buying high and selling low, because they are driven by fear and greed.
  • This is the power of simple diversification – it’s one of the few free lunches in investing. And by being diversified – you increase your probability of success.
  • At least every year, revisit your financial plan and your investments to see where they are in relation to your short and long term goals. Make adjustments if necessary. Seek professional advice should you think you need it.

Financial Strategies for Families Financial Strategies for Families Presentation Transcript

  • Financial Planning Strategies for Women & Families Barry Mendelson, CFP® 925-988-0330 x22 [email_address] As of December 31, 2010
  • Opinions expressed are those of Barry Mendelson, CFP® and Just Plans Etc. This presentation should not be construed as investment advice. The information contained in this presentation is compiled from sources believed to be reliable. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. The markets can remain irrational longer than you can remain solvent. Disclosures
  • Barry Mendelson, CFP® Local investment and personal finance professional. More than 15 years experience working for leading financial services companies including Charles Schwab, AXA Rosenberg, Neuberger Berman, and Franklin Templeton. Prior to joining Just Plans Etc. in 2010, was a Vice President in Charles Schwab & Co’s $250 billion investment management division. Certified Financial Planner™ certificate holder since 2008. B.A. in Business Economics & Accounting from U.C. Santa Barbara in 1995. Just Plans Etc. Founded in 1983 and based in Walnut Creek, California - Just Plans is a fee-only wealth management firm and SEC registered investment advisor. Just Plans provides investment management and financial planning services to more than 100 individuals, families, and companies. The firm specializes in tax-efficient investing and helping investors realize meaningful value from qualified retirement plans, concentrated stocks positions, stock options, and other forms of equity. As a fiduciary, the firm puts the interests of the client above all else. About
  • 1. Financial Planning 2. Investment Planning 3. Lessons for the Future Agenda
  • 1. Financial Planning Agenda
  • Considerations Specific to Women
    • Typically earn less
    • Spend less time in the workforce
    • Have longer life expectancy
    • Take care of others
  • Charles Schwab More than 30 years ago, Charles R. Schwab founded this firm with a clear mission: to empower individual investors to take control of their financial lives, free from the high costs and conflicts of traditional brokerage firms. His vision - to provide the most useful and ethical financial services in the world - continues to guide or values-driven approach to growth, client service, community involvement and employee development. Google Google’s mission is to organize the world‘s information and make it universally accessible and useful. Don’t be evil. (Unofficial). Create a (Family) Mission Statement
  • Create a Family Mission Statement
    • What’s most important about our family?
    • What do you think our goals should be?
    • What are our strengths as a family?
    • How should we take care of relatives who are or become sick or disabled?
    • How should we resolve our disputes?
    • How important is the family business to you?
    • What professionals or structures should we bring in to help us?
    • What do you think the role of our family should be in helping the community?
    • What should we be doing individually and as a family with regard to philanthropy?
  • Example: Smith Family Mission Statement
    • Know that time is our most valuable asset.
    • Experiences are more valuable than possessions.
    • Spend time outdoors as a family.
    • Explore the world and welcome others into our home.
    • Support (through financial and volunteer efforts) public education and the Cancer Support Community of the Bay Area.
    • Spend time with those we love and respect – and feel the same way about us.
    • Learn and work in the family business.
  • Define Short & Long-Term Goals
    • You
    • Short-term: 5 Years or less
    • _____________________
    • _____________________
    • _____________________
    • Long-term: 5 years and longer
    • _____________________
    • _____________________
    • _____________________
    • Your Spouse
    • Short-term: 5 Years or less
    • _____________________
    • _____________________
    • _____________________
    • Long-term: 5 years and longer
    • _____________________
    • _____________________
    • _____________________
  • Letter to Self
    • On February 23, 2011 I/we currently have an available after-tax income stream of $ per month (including spouse if applicable).
    • My/our current lifestyle costs are $ per month.
    • I/we currently save $ per month in tax deferred accounts and $ per month in after tax accounts.
    • My/our current net worth is $ . This includes a retirement plan balance of $ , assets of $ , and personal investments of $ .
    • I plan on retiring in the year 20 , which is years from now.
    • My post retirement lifestyle expenses will be $ per year / $ per month.
    • Based on living until age , I will need to have accumulated $ by age , in pre-tax and post-tax dollars to be comfortable in retirement and potentially leave a legacy to others.
    • Base on the above information, I need to take the following actions: ,
    • .
  • Not Everything is in Your Control CONTROL How much I save How much I spend Lifestyle - # of homes, travel, autos. Allocation of assets (amount of risk) When I retire How much insurance I have How much I give to charity How much I make Begin Social Security Benefits NO CONTROL Markets Death - genetics Children’s behavior Reimbursements Disability Inflation Tax rates & political conditions Weather The Media
  • Define Your Lifestyle Goals For each Goal, establish Ideal and Acceptable amounts. Lifestyle Goals Ideal Basic Living Expenses $$$ Car $$$ Travel $$$ Boat $$$ Lifestyle Goals Ideal Acceptable Basic Living Expenses $$$ $ Car $$$ $ Travel $$$ $ Boat $$$ $ Acceptable Range Lifestyle Goals Basic Living Expenses Car Travel Boat
  • Define Your Lifestyle Goals Acceptable Range Retirement Age Ideal Acceptable How willing are you to retire later? You 60 66 Somewhat Willing Your Spouse 62 70 Very Willing Retirement Age Ideal Acceptable You 60 66 Your Spouse 62 70 Retirement Age Ideal You 60 Your Spouse 62
  • Plan for Future Living Expenses Acceptable Range Importance Lifestyle Goals Ideal Acceptable Needs 10 Basic Living Expense $70,000 $66,000 8 Your Lexus $35,000 $25,000 Wants 7 Annual Travel Fund $18,000 $12,000 6 Your Spouse’s Honda $25,000 $15,000 Wishes 3 Renovate Kitchen $50,000 $25,000 2 Gifts to Children $10,000 $0 Total Spending for Life of Plan $2,615,000 $2,130,000 19% < Ideal
  • Range of Ideal and Acceptable Goals IDEAL ACCEPTABLE Retirement Age: 60 66 62 70 Retirement Income: $160,000 $145,000 Risk Tolerance: No Risk Moderate Estate: $1,000,000 $100,000 Education: Law School $ - Savings: -$15,000 +$10,000 Travel (other): $25,000 $15,000
  • Annual Savings to Accumulate $1 Million by Age 65 Annual Savings
  • What Kind of Investor Are You? Very Conservative Conservative Moderate Aggressive Very Aggressive Can you get the RETURN you need at the RISK level you’re willing to accept?
  • 2. Investment Planning Agenda
  • Returns by Style Source: Russell Investment Group, Standard & Poor’s, FactSet, J.P. Morgan Asset Management. All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represe nts period 10/9/07 – 12/31/10 , illustrating market returns since the most recent S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 – 12/31/10 , illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. For all tim e periods, total return is based on Russell - style indexes with the exception of the large blend category, which is reflected by th e S&P 500 Index. Past performance is not indicative of future returns. Data are as of 12/31/10 . Charts reflect index levels (price change only). All returns and annotations reflect total return, including dividends. Jan-10 Apr-10 Sep-10 Dec-10 1,000 1,050 1,100 1,150 1,200 1,250 1,300 S&P 500 Index 2010: +15.1% 4 Q10 : +10.8% Jan-07 May-08 Sep-09 Dec-10 600 800 1,000 1,200 1,400 1,600 S&P 500 Index Since 10/9/07 Peak: - 13.6% Since 3/9/09 Low: +93.1%
  • Various Asset Class Returns 10-yrs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4Q10 '01 - '10 REITs REITs DJ UBS Cmdty MSCI EME REITs MSCI EME REITs MSCI EME Barclays Agg MSCI EME REITs Russell 2000 MSCI EME 26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 16.3% 350.0% DJ UBS Cmdty Market Neutral Barclays Agg Russell 2000 MSCI EME DJ UBS Cmdty MSCI EME MSCI EAFE Market Neutral MSCI EAFE Russell 2000 DJ UBS Cmdty REITs 24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 15.8% 178.0% Market Neutral Barclays Agg Market Neutral MSCI EAFE MSCI EAFE MSCI EAFE MSCI EAFE DJ UBS Cmdty Asset Alloc. REITs MSCI EME S&P 500 Russell 2000 15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 10.8% 84.8% Barclays Agg Russell 2000 REITs REITs Russell 2000 REITs Russell 2000 Market Neutral Russell 2000 Russell 2000 DJ UBS Cmdty REITs Asset Alloc. 11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 7.4% 80.2% Asset Alloc. MSCI EME Asset Alloc. S&P 500 Asset Alloc. Asset Alloc. S&P 500 Asset Alloc. DJ UBS Cmdty S&P 500 S&P 500 MSCI EME Market Neutral 0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 7.4% 76.9% . Russell 2000 Asset Alloc. MSCI EME Asset Alloc. S&P 500 Market Neutral Asset Alloc. Barclays Agg S&P 500 Asset Alloc. Asset Alloc. MSCI EAFE Barclays Agg -3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 6.7% 76.3% S&P 500 S&P 500 MSCI EAFE DJ UBS Cmdty DJ UBS Cmdty S&P 500 Market Neutral S&P 500 REITs DJ UBS Cmdty MSCI EAFE Asset Alloc. MSCI EAFE -9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 6.4% 47.1% MSCI EAFE MSCI EAFE Russell 2000 Market Neutral Market Neutral Russell 2000 Barclays Agg Russell 2000 MSCI EAFE Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty -14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% -1.3% 41.7% MSCI EME DJ UBS Cmdty S&P 500 Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty REITs MSCI EME Market Neutral Market Neutral Market Neutral S&P 500 -30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% -1.6% 15.1% Asset Class Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management. The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE Index, 5% the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and 5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities repr return for stated period. Past performance is not indicative of future returns. Please see disclosure page at end for index d efi as of 9/30/10, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 8/31/10. “10 - yrs” returns repr esent cumulative total return and are not annualized. These returns reflect the period from January 1, 2000 – December 31, 2010 *Market Neutral returns include estimates found in disclosures. Data are as of 12/31/10 .
  • Global Commodities 0 500 1000 1500 2000 2500 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 Source: Dow Jones/UBS, FactSet, J.P. Morgan Asset Management. Commodity prices represented by the appropriate DJ/UBS Commodity sub - index. Data reflect most recently available as of 12/31/10 . Source: USDA, BP Statistical Review of World Energy, J.P. Morgan Asset Management . Data are as of 12/31/10 . Class '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 0 50 100 150 200 250 300 350 400 450 Commodity Prices Weekly index prices rebased to 100 Precious metals Industrial metals Energy Livestock Grains Oil Demand: Emerging Markets Share Emerging markets as % of total global oil consumption Grain Demand: Emerging vs. Developed Markets Millions of metric tons Emerging Markets Developed Markets 30% 32% 34% 36% 38% '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
  • Monthly: January 1926 - December 2010 CRSP data provided by the Center for Research in Security Prices, University of Chicago. The S&P data are provided by Standard & Poor's Index Services Group. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield). $8,201 Small Cap (CRSP 6-10 Index) $2,590 Large Cap (S&P 500 Index) $85 Long-Term Government Bonds Index $20 Treasury Bills $12 Inflation (CPI) $10,000 $1,000 $100 $10 $1 $0 1926 1936 1946 1956 1966 1976 1986 1996 2006 2010 Growth of Wealth
  • S&P 500 Index (USD) Daily Returns: January 1, 1926-March 31, 2010 Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. The S&P data are provided by CRSP (January 1, 1926-August 31, 2008) and Bloomberg (September 1, 2008-March 31, 2010). Returns include reinvested dividends. Bull and bear markets are defined in hindsight using cumulative daily returns. A bear market (1) begins with a negative daily return, (2) must achieve a cumulative return less than or equal to -10%, and (3) ends at the most negative cumulative return prior to achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market. Performance data represents past performance and does not predict future performance. Average Duration Bull Market: 413 Days Bear Market: 220 Days Average Return Bull Market: 58% Bear Market: -21% Bull and Bear Markets 220% -13% -85% 20% -16% -39% 119% 88% 27% -15% -10% -13% 100% 44% -53% 25% 40% -13% -14% 26% -25% 22% -11% 23% -33% 83% -11% 99% -26% 19% -11% -16% 26% 53% 91% -13% 121% -11% 26% -13% 18% 69% -21% -11% 44% -27% 15% 96% -11% 59% -27% -10% -21% -32% 56% -12% 38% -45% 22% -13% 50% -13% 38% -15% 27% -13% 26% -10% 21% -16% 48% -20% 78% -11% 156% -33% 73% -10% 16% -19% 303% -11% 37% 50% -19% -12% 23% -11% 13% -47% 21% -14% 113% -55% 03/09/2009 -55% 3/31/2010 -20% 1% 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
  • Historical returns by holding period - 37% - 8% - 15% - 2% - 2% 1% - 1% 1% 2% 6% 1% 5% 51% 43% 32% 28% 23% 21% 19% 16% 17% 18% 12% 14% - 40% - 30% - 20% - 10% 0% 10% 20% 30% 40% 50% 60% 1 - yr. 5 - yr. rolling 10 - yr. rolling 20 - yr. rolling Annual total returns, 1950 - 2009 Range of Stock, Bond and Blended Total Returns Asset Sources: Factset , Robert Shiller , Strategas /Ibbotson, Federal Reserve, J.P. Morgan Asset Management. Data are as of 12/31/09. 50/50 Portfolio 9.0% $560,441 Bonds 6.2% $333,035 Stocks 10.8% $777,670 Annual Avg. Total Return 50/50 Portfolio Bonds Stocks Growth of $100,000 over 20 years
  • Diversification and the Average Investor 8% 8% 8% 22% 9% 13% 4% 26% Equity Mkt. Neutral Commodities REIT S&P 500 Russell 2000 MSCI EAFE MSCI EM Barclay's Agg. 55% 15% 30% S&P 500 MSCI EAFE Barclay's Agg. 9.9% 8.2% 7.0% 6.7% 5.2% 4.4% 3.2% 2.8% 2.3% 0% 2% 4% 6% 8% 10% 12% REITS S&P 500 Bonds Oil Gold EAFE Homes Inflation Avg. Investor 20 - year Annualized Returns by Asset Class (1990 – 2009) (Top) Indexes and weights of the traditional portfolio are as follows: U.S. stocks: 55% S&P 500, U.S. bonds: 30% Barclays Capital Aggregate. International stocks: 15% MSCI EAFE/ Portfolio with 25% in alternatives is as follows: U.S. stocks: 22.1% S&P 500, 8.8% Russell 2000; International Stocks: 4.4% MSCI EM, 13.2% MSCI EAFE; U.S. Bonds: 26.5% Barclays Capital Aggregate; Alternatives: 8.3% CS/Tremont Equity Market Neutral, 8.3% DJ/UBS Commodities, 8.3% NAREIT Equity REIT Index. Return and standard deviation calculated using Zephyr. Charts are shown for illustrative purposes only. Past returns are no guarantee of future results. Diversification does not guarantee investment returns and does not eliminate risk of loss. Data are as of 12/31/10. (Bottom) Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Barclays Capital U.S. Aggregate Index, Homes: median sales price of existing single - family homes, Gold: USD/troy oz, Inflation: CPI. Average asset allocation investor return is based on an analysis by Dalbar Inc. which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable) and represent the 20 - year period ending 12/31/09 to match Dalbar’s most recent analysis. Traditional Portfolio More Diversified Portfolio Return: 6.86% Standard Deviation: 11.12% Return: 7.92% Standard Deviation: 9.99% Maximizing the Power of Diversification, 1994 - 2010
  • Various Asset Class Returns 10-yrs 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4Q10 '01 - '10 REITs REITs DJ UBS Cmdty MSCI EME REITs MSCI EME REITs MSCI EME Barclays Agg MSCI EME REITs Russell 2000 MSCI EME 26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 16.3% 350.0% DJ UBS Cmdty Market Neutral Barclays Agg Russell 2000 MSCI EME DJ UBS Cmdty MSCI EME MSCI EAFE Market Neutral MSCI EAFE Russell 2000 DJ UBS Cmdty REITs 24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 15.8% 178.0% Market Neutral Barclays Agg Market Neutral MSCI EAFE MSCI EAFE MSCI EAFE MSCI EAFE DJ UBS Cmdty Asset Alloc. REITs MSCI EME S&P 500 Russell 2000 15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 10.8% 84.8% Barclays Agg Russell 2000 REITs REITs Russell 2000 REITs Russell 2000 Market Neutral Russell 2000 Russell 2000 DJ UBS Cmdty REITs Asset Alloc. 11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 7.4% 80.2% Asset Alloc. MSCI EME Asset Alloc. S&P 500 Asset Alloc. Asset Alloc. S&P 500 Asset Alloc. DJ UBS Cmdty S&P 500 S&P 500 MSCI EME Market Neutral 0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 7.4% 76.9% . Russell 2000 Asset Alloc. MSCI EME Asset Alloc. S&P 500 Market Neutral Asset Alloc. Barclays Agg S&P 500 Asset Alloc. Asset Alloc. MSCI EAFE Barclays Agg -3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 6.7% 76.3% S&P 500 S&P 500 MSCI EAFE DJ UBS Cmdty DJ UBS Cmdty S&P 500 Market Neutral S&P 500 REITs DJ UBS Cmdty MSCI EAFE Asset Alloc. MSCI EAFE -9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 6.4% 47.1% MSCI EAFE MSCI EAFE Russell 2000 Market Neutral Market Neutral Russell 2000 Barclays Agg Russell 2000 MSCI EAFE Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty -14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% -1.3% 41.7% MSCI EME DJ UBS Cmdty S&P 500 Barclays Agg Barclays Agg Barclays Agg DJ UBS Cmdty REITs MSCI EME Market Neutral Market Neutral Market Neutral S&P 500 -30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% -1.6% 15.1% Asset Class Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management. The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE Index, 5% the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and 5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities repr return for stated period. Past performance is not indicative of future returns. Please see disclosure page at end for index d efi as of 9/30/10, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 8/31/10. “10 - yrs” returns repr esent cumulative total return and are not annualized. These returns reflect the period from January 1, 2000 – December 31, 2010 *Market Neutral returns include estimates found in disclosures. Data are as of 12/31/10 .
  • 3. Lessons for the Future Agenda
  • Lessons
    • This is an exciting and challenging time to be an investor.
    • You owe it to your family and yourself to make sure that your plan is designed to deal with the changes you’ve experienced the last few years and take advantage of opportunities to maximize the probability that you will achieve all your financial goals.
    • We wish you nothing but success in achieving all that’s important to you.
  • Lessons
    • Define your goals.
    • Create a plan.
    • Put it into action.
    • Revisit it frequently.
  • Lessons
    • Markets are difficult to predict in the short-term.
    • Intelligently diversifying globally expands your opportunity set.
    • “ Be greedy when others are fearful and fearful when others are greedy.” – Warren Buffet.
    • Have a long-term perspective.
  • Articles: Creating a Family Mission Statement Creating a Personal Disaster Plan for Your Home, Your Loved Ones and Your Finances Budget Worksheet The Organizer More articles at: www.justplans-etc.blogspot.com Barry Mendelson, CFP® 925-988-0330 ext. 22 [email_address] www.JustPlans-Etc.com 1399 Ygnacio Valley Rd, Suite 24 Walnut Creek, CA 94598 Resources