Your Free Assessment

Meeting financial goals is best accomplished through rigorous measurement regularly adjusting for changes in market conditions.
Using momentum and valuation models, our research helps us construct estimated risk & return projectionsfor different risk profiles.

Key actions:

1. Develop a catalog of possible portfolio strategies using various estimated risk-return profiles.

On the bar chart (below), let’s examine one sample projection for a portfolio valued at approximately $500,000.  Using estimated growth for this particular portfolio over the next market cycle, we estimate the future portfolio value.  The bottom yellow-orange colored bar indicates there is about 5% chance that this portfolio will lose -1.50% per year leaving the portfolio owner with $483,599 at the end of a 7-year market cycle.

Directing your eyes upward one line, the next yellow-orange colored bar illustrates there is about a 5% chance of yielding 3% per year leaving the portfolio owner with $589,485 and so on up the chart.

2. Determine which portfolio value displayed is closest to that value permitting your cash flow needs to be met.

Try to avoid relying on historical averages to select a plan to support your cash flow goal.  A list of portfolio value goals with associated chances is preferredto historical averages.  On the bar chart, the investor can determine if, say, an estimated 5% chance of being left with $483,599 in 7 years is compatible with their expected financial goals or in summary:

a 5% chance of having $483,599
a 5% chance of having $589,485
a 10% chance of having $669,101
a 27% chance of having $$762,616
a 13% chance of having $871,542
a 28% chance of having $989,224
a 7% chance of having $1,149,996
a 1% chance of having $1,622,556
a 4% chance of having $2,812,715

3. Are you comfortable with the chances displayed alongside the portfolio value closest to your portfolio’s goal?

Let’s assume under no circumstance can this investor be left with less than $500,000.  The 5% chance of a loss must be confronted and the chance of loss minimized.  We would suggest and work with him/her to readjust the portfolio lessening the chance of portfolio loss.  A somewhat less chance of registering the big gains is the trade-off for this lowering of risk.

Alternatively, let’s say this investor needs a value no less than $1,149,996 at the end of the next market cycle.  Under the circumstances illustrated on the bar chart, we have less than a 10% chance of meeting our expectations.  In this hypothetical instance, we would work to add portfolio risk to boost expected chance of higher portfolio return and/or suggest they boost their future savings.

4. With key actions 1 through 4 completed, deploy your plan and monitor it regularly.

We trust following these key actions affords you better focus of your expected financial goals.