A Message from our CEO...
I'm going to give you a little math lesson today, one that's very important for you to understand. It's not because I want to bring back horrible memories of math class for you, but because this math is critical to your successful financial future.
Now, before you click to another page because "math is not your thing," please note that this is a very simple lesson.
Question: Which 10 year portfolio wins?:
- 5% annual return?
- 8% annually except for year 2 where the return was -30%?
- 8% annually except for year 8 where the return was -30%?
Before I tell you the answer, it's important to put this into perspective.
Over the past 15 years, there have been two significant market corrections.
- The S&P 500 declined 49% from March 2000 to October 2002.
- The S&P 500 declined 57% from March 2007 to March 2009.
So, in my example, a 30% decline is not unrealistic. It has happened twice in the past fifteen years.
To illustrate the results of my example, I am going to use a single deposit of $100,000 in the first year and run each portfolio out for ten years.
Option 1: At the end of ten years, a single $100,000 deposit growing at 5% annually is worth $162,889.
Option 2: At the end of ten years, a single $100,000 deposit that grew by 8% in year 1, dropped by 30% in year 2 and then earned 8% for the remaining eight years is worth $139,930.
Option 3: At the end of ten years, a single $100,000 deposit that grew by 8% in the first 7 years, dropped by 30% in year 8 and then grew again by 8% in the remaining 2 years is worth $139,930.
The 5% annual return portfolio wins!
In actual fact, you could earn as little as 3.5% annually and still beat the 8% return portfolio that experienced a single years loss of 30%.
So, the moral of this story is to focus on consistency of returns and do everything in your power to limit the downside risk.
Which is why we are so adamant about the asset mix in all of our client portfolios. Our goal is to always incorporate assets that WILL NOT GO DOWN IN VALUE. We know that the net return doesn't have to be huge to win. It just needs to be consistent.
As we get together for our upcoming financial plan review meetings, we are going to be re-visiting these asset classes simply because of their value to a well-constructed investment portfolio.
All the best,
~Scott
P.S. Do you know someone who is close to retiring?
Do you know somebody who has his/her own business?
Introducing me to these people is more important now than ever before. The financial landscape will look a lot different in the next 2-5 years, and these two groups (i.e. those close to retirement and those who are business owners) are going to be affected the most. We are focusing our efforts on making sure our information reaches them to provide valuable insight and advice.
My latest book, "How To Choose And Work With A Financial Planner You Can Trust" is available now. You can share it with anyone you introduce us to - FREE! Simply have them click on this private link:
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Don't Put Balance Transfer Bandage on
Serious Debt Wound
 Balance transfer credit card offers can be hard to resist especially as issuers compete for your business by offering super-low interest rates and transfer fees. Whether you have moderate or steep debt, paying low or no interest for a few months, or even a year in some cases, can seem like the answer to your problems.
But that's not always the case. A balance transfer is better-suited for some situations than others, and if yours isn't one of them, you could end up in a deeper debt hole.
Read More, and see what our very own Mike Chronowich says about when a balance transfer is advisable.
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Be a Fly on Our Wall
Staying informed about the latest information and strategies is a challenge. Fortunately, when you have a Top Guns Network™, as we do, the process is a lot easier.
We regularly communicate with members of our Top Guns Network™ to stay up-to-date on what's important in their areas of expertise. When we do this, we record our call so you can be a "fly on the wall" and listen in.
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The Business Owner's Toolbox
Financial planning for business owners and entrepreneurs is, to put it quite simply,
different.
Don't let anyone tell you otherwise.
That's why we devote this section to our recent articles that are specifically targeted to this important market segment and provide valuable insight to help you succeed.
RECENT BUSINESS OWNER ARTICLES:
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Learn from Our Free Radio Show
Scott covers financial planning topics relevant to Canadians who are motivated by creating a bigger future for themselves and their loved ones.
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Financial planning is a lifelong pursuit. It starts with an in-depth understanding of your current issues and concerns, and a clear understanding of your needs and goals. There then needs to be a process in place for monitoring your progress towards those goals to ensure they are attained.
At IRONSHIELD Financial Planning, our
CFP professionals are continually working to make those goals a reality for each and every one of our clients. We're dedicated to helping you make smart, educated and well-thought-out financial decisions throughout all the various stages of your life.
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The CFP professionals at IRONSHIELD Financial Planning® are continually working to make financial goals a reality for each and every one of our clients. We're dedicated to helping you make smart, educated and well-thought out financial decisions throughout all stages of your life.
The foregoing is for general information purposes only and is the opinion of the writer. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. However, please call Scott Plaskett, CFP of IRONSHIELD Financial Planning® to discuss your particular circumstances.
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IRONSHIELD Financial Planning®
310-701 Evans Avenue
Etobicoke, ON
M9C 1A3
416-626-6515
info@ironshield.ca
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