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Copyright ©2005 Ibbotson Associates, Inc. Portfolio Performance Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S. Clinton.

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Presentation on theme: "Copyright ©2005 Ibbotson Associates, Inc. Portfolio Performance Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S. Clinton."— Presentation transcript:

1 Copyright ©2005 Ibbotson Associates, Inc. Portfolio Performance Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S. Clinton Street, Fort Wayne, IN , Phone Insurance offered through Lincoln affiliates and other fine companies. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. CRN

2 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Cash BondsStocks Asset allocation is the process of combining asset classes such as stocks, bonds, and cash in a portfolio in order to meet your goals. What is asset allocation?

3 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Long-term portfolio performance Year-end 1925–2004 $2,533 $1,323 $573 $206 $62 $.10 $1 $10 $100 $1,000 $10, % stocks 75% stocks/25% bonds 50% stocks/50% bonds 25% stocks/75% bonds 100% bonds Ending wealth Average return 10.4% 9.5% 8.4% 7.0% 5.4% Hypothetical value of $1 invested at year-end Assumes reinvestment of income and no transaction costs or taxes.

4 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. 20-year portfolio performance Year-end 1984–2004 $11.99 $10.08 $8.19 $6.45 $4.92 $ % stocks 75% stocks/25% bonds 50% stocks/50% bonds 25% stocks/75% bonds 100% bonds Ending wealth Average return 13.2% 12.2% 11.1% 9.8% 8.3% $1 $10 $100 Hypothetical value of $1 invested at year-end Assumes reinvestment of income and no transaction costs or taxes.

5 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Highest return Lowest return Annual portfolio performance 100% Bonds 50% Stocks 50% Bonds 25% Stocks 75% Bonds 100% Stocks 100% Bonds 100% Stocks 100% Stocks 100% Bonds 100% Stocks 100% Bonds 100% Bonds 100% Stocks 100% Stocks 100% Bonds % Stocks 25% Bonds 25% Stocks 75% Bonds 25% Stocks 75% Bonds 25%Stocks 75% Bonds 25% Stocks 75% Bonds 25% Stocks 75% Bonds 75% Stocks 25% Bonds 75% Stocks 25% Bonds 75% Stocks 25% Bonds 75% Stocks 25% Bonds 75% Stocks 25% Bonds

6 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. 12-month Portfolio summary statistics 0.0%1.2%13.7%0.0%0.7%19.5%8.2%-5.6%32.7%5.4% 0.0%3.3%14.9%0.3%-1.2%20.0%11.4%-22.0%40.9%7.0% 0.0%1.5%16.2%5.3%-6.1%22.2%19.4%-40.7%77.8%8.4% 0.6%-1.3%17.8%7.6%-11.5%29.0%24.0%-55.7%118.7%9.5% 26.5%3.5%-4.9%21.4%11.7%-17.4%36.1%-67.6%162.9%10.4% Negative periods Lowest return Highest return Negative periods Lowest return Highest return Negative periods Lowest return Highest return Average return 120-month60-month Holding period Stocks Bonds 100% 75% 25% 50% 25% 75% 100% Rolling periods range of returns 1926–2004

7 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Reduction of portfolio risk over time -100% -75% -50% -25% 0% 25% 50% 75% 100% 125% 150% 175% 200% 100% stocks 75% stocks 25% bonds 50% stocks 50% bonds 25% stocks 75% bonds 100% bonds 60-month holding periods 12-month holding periods 120-month holding periods Each bar shows the range of compound annual returns for each asset class over the period 1926–2004. Compound annual return 5.4% 7.0% 8.4%10.4%9.5% 1926–2004

8 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Risk is measured by standard deviation. Return is measured by arithmetic mean. Risk and return are based on annual data over the period 1970–2004. Portfolios presented are based on modern portfolio theory. Stocks and bonds: risk versus return Risk Return 1970–2004 9% 10% 11% 12% 13% 10%11%12%13%14%15%16%17%18% maximum risk portfolio – 100% stocks 100% bonds 25% 75% – minimum risk portfolio 50% 60% 40% 80% 20%

9 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Simulated portfolio performance Years into retirement $10,000 $100,000 $1,000,000 $500,000 $50, % stocks 75% stocks/25% bonds 50% stocks/50% bonds 25% stocks/75% bonds 100% bonds 50% chance of this scenario Assumes a $35,000 initial annual withdrawal from a $500,000 portfolio, adjusted annually for inflation thereafter. Historical 1926–2004 return, risk, and inflation for the portfolios were used. Assumes reinvestment of income and no transaction costs or taxes.

10 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Simulated portfolio performance Assumes a $35,000 initial annual withdrawal from a $500,000 portfolio, adjusted annually for inflation thereafter. Historical 1926–2004 return, risk, and inflation for the portfolios were used. Assumes reinvestment of income and no transaction costs or taxes. 25% chance of this scenario Years into retirement 100% stocks 75% stocks/25% bonds 50% stocks/50% bonds 25% stocks/75% bonds 100% bonds $100,000 $1,000,000 $500,000 $10,000 $50,

11 This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results. 3/1/2005 Copyright ©2005 Ibbotson Associates, Inc. Simulated portfolio performance 100% stocks 75% stocks/25% bonds 50% stocks/50% bonds 25% stocks/75% bonds 100% bonds Assumes a $35,000 initial annual withdrawal from a $500,000 portfolio, adjusted annually for inflation thereafter. Historical 1926–2004 return, risk, and inflation for the portfolios were used. Assumes reinvestment of income and no transaction costs or taxes. 10% chance of this scenario $10,000 $100,000 $1,000, $500,000 $50,000 Years into retirement


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