Presentation on theme: "Lawing Financial 2nd Quarter 2009 2Q09. Markets Overview All data as of 6/30/09 Monthly PerformanceYear-To-Date Performance Indices5/29/096/30/09Gain/Loss%"— Presentation transcript:
Challenges Participants Experience Dalbar Study conducted from 1986 to 2005 S&P 50011.90% Equity Investor3.51% Retirement Plan Investor 6.00% Annual difference between S&P 500 and Systematic/401k Investor Returns: 5.90% The study, done by DALBAR, was one that studied various types of investors, their average returns and the tendencies that they shared and the typical trends that occurred. Even though the average participant still made the mistakes of buying high and selling low, they out performed the average Equity (lump sum) Investor. Why is that? The answer: The Power of Dollar Cost Averaging
7.5% 5.7% 3.6% 3.7% 2.3% 3.0% 0 2 4 6 8 10% StocksStocks after taxes Bonds after taxes BondsCashCash after taxes Inflation 9.6%
0 50 100 150 200 $250k 51015202530354045 Value of taxable account Value of tax-deferred account Years To Retirement **Based on a $10,000 Initial Investment, 28% Tax Bracket and 8% Return
Stopping Deferrals Lose tax savings Lose Tax Deferred Growth Lose on Future Earnings Taking Loans Loan Interest in not tax deductible Loan fees are normally about $75 to $100 initially and then annually. That means on a $1,000 loan, in addition to interest, borrower is paying another 7.5% to 10% If you leave or are terminated, then the loan must be repaid. If it is not, then it will be taken from your balance and instantly become taxable with other IRS penalties. The Negative Impact of Certain Decisions
#1 Golden Rule; Do Not Panic. Volatility, is now, and always has been a part of the markets. How you react to it will dictate your long-term performance. Start by reviewing your timetable. Visit with a Lawing Advisor to review your risk profile, possibly take a new risk questionnaire. If you are planning on retiring in less than 3 years, be sure to discuss your plans, savings goals and risk profile with a Lawing Financial Advisor. What do you do now?