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2010 09 wesletter


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2010 09 wesletter

  1. 1. Wesletter September 2010 Vol. 2, No. 8 Investment and Planning Insights from Wesban Bleak Picture The Employee Benefit Research Institute (EBRI) is an organization founded in 1978 with the mission of encouraging and contributing to the development of sound employee-benefit programs and public policy through objective research and education. Every year, the EBRI publishes a retirement confidence survey. The 2010 survey interviewed 902 workers and 251 retirees in order to find out their views and attitudes about investing for retirement and their confidence in being able to meet retirement financial goals. Unfortunately, the survey results look pretty bleak this year. For example, as the image illustrates, 27% of workers report having saved less than $1,000, and 16% report retirement savings in the $1,000–$9,999 range. Overall, more than half of workers have less than $25,000 saved, at a time when people start questioning if $1 million will be sufficient for a safe retirement. Take a minute and see if you recognize yourself in this picture. About Wesban The Wesban Team Wesban provides financial 205-995-7778 planning and conservative investment management designed to help families and small businesses grow, protect, and transfer wealth.
  2. 2. Wesban Financial Consultants, P.C. Investment and Planning Insights from Wesban September 2010 2 Dangers of Market Timing period were sure to get market exposure during the crucial hot months. Advocates of Market Timing: On the contrary, a Two of the most dangerous words in the investing number of websites, newsletters, and other trading world are “market timing.” Market timing occurs services boast they can time the market. While when investors try to predict which direction the their returns may have in fact beaten the market by stock market will head. While some investors have a considerable margin, it’s safe to assume that these been known to make money timing the market, it systems can’t consistently hold up over the long is highly inadvisable for long-term investors to try term. On some occasions and during some this extremely risky strategy. Opponents of Market stretches of time, market timing can help generate Timing: Most investors and academics believe it is impressive profits. However, you must be familiar impossible to forecast market movements. Such a with the dangers behind such an approach. technique amounts to gambling when compared to a sound investment approach. It fails far more than it works, and market timers often end up buying high and selling low. Furthermore, you run the risk of missing periods of exceptional returns. For example, over the past 20 years, a $1 investment in stocks, as represented by the Standard & Poor’s 500®, would have grown to $4.84. If that same $1 investment happened to miss the best 10 months of stock returns over the past 20 years, the ending value would have equaled only $2.04. This would have been less than the value for an investor in a 30-day Treasury bill, a.k.a. cash, $2.12. Only those who remained invested in stocks through the entire ©2010 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is not warranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. "Morningstar" and the Morningstar logo are registered trademarks of Morningstar, Inc. The Wesban Team Wesban Financial Consultants, P.C. Tel:205-995-7778 1800 Providence Park Suite 200 Birmingham, Alabama 35242