2011 Q1
The Money Planner – Q1 2011
Greetings Clients and Friends!
I hope this finds you well! As Always, the Money Planner's goal is to provide items of use and interest as you plan your financial future. Please share with your friends and colleagues as you feel appropriate.
Year in Review
2010 was a very good year for the Money Planner Portfolio. The portfolio gained 20.5%. The S&P500 returned 15% for comparison. The portfolio return was lessened by a shift of 30% into cash in Q4 last year. Numerous corrections have occurred in October, and with the current worldwide volatility this move was insurance in case of a market downturn. Thankfully the downturn did not happen!
The planner portfolio is an overall portfolio for high net worth individuals. It combines securities selected for both income and growth.
As the table shows, in both years since its inception, the portfolio has outperformed the S&P 500. The portfolio has recovered all of the losses from the 2008 October market meltdown.
Risks in the Year Ahead
The market will likely be a challenging one in the year ahead. A few of the potential trouble spots:
The US National Debt, now over $14.1Trillion, or over $45,000 per citizen.
European countries in financial trouble (Greece, Ireland, Portugal, and Spain) that could require bailouts.
Unrest in the Middle East that could impact the flow of oil and cause price spikes.
The number of home foreclosures in the US, as people have lost jobs, or went underwater (owe more than the house is worth) and returned the house to the bank.
So, the best option is to cash in all your investments and stuff the money in the mattress, right? WRONG!
The above risks must be managed for an individual to maintain or grow his or her wealth. There is no such thing as a risk-free investment. In addition to the possibility of your mattress burning, an increase in inflation could seriously decrease the buying power of cash investments or CD's. Likewise inflation can cause the value of fixed-income investments like bonds to decrease. Gold protects against inflation, but offers no income. Real Estate prices fluctuate in value and can go down. Stocks can fall in value if the underlying company's earnings suffer.
The takeaway is, all investments carry a degree of risk, that must be managed. It is very important for an investor to understand these risks and tailor their investments accordingly, or hire an an investment adviser or planner to do so for them.
I specialize in providing personalized investment recommendations for clients. My specialty is creating a portfolio of securities that deliver above average income, while preserving or growing the portfolio value.
Please visit my website for more details about how I may be able to help you plan your financial future.
Scot Wolf
Financial Independence Planner
Email: Scot@scotwolfplanner.com
Phone: 952-888-4991
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