Financial Planning Secrets of the Wealthy

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					WHAT THE WEALTHY DO
DIFFERENTLY™ SEMINAR SERIES


    “Retirement Planning and Investment
    Management Secrets of the Wealthy”




Presented by Jason Wenk
     The examples that you are about to see in this
 presentation are hypothetical and a taxpayer/investor
               should note the following:


• The tax and estate planning information contained in this seminar is
general in nature. It is provided for informational purposes only, and
should not be construed as legal or tax advice. Always consult an attorney
or tax professional regarding your specific legal or tax situation.

• Different types of investments involve varying degrees of risk, and there
can be no assurance that any specific investment will either be suitable or
profitable for a client's investment portfolio.

• Investment advisory fees reduce the return on your investment. For a full
disclosure of the adviser’s fee, please see Schedule F of the adviser’s Form
ADV, Part II.


     Advisory Services Offered Through Retirement Wealth Advisors, Inc. An SEC Registered Investment Advisor
Today’s Goal
                Educate Not Sell
 4 Primary Differences Between the Investment
    Strategies of the Wealthy and Most Others
   How to Significantly Reduce Required Minimum
    Distributions as well as Roth IRA Conversion Taxes
   Identifying Bear Market Indicators and How to Get
    Defensive
   How to Embrace Academic Study to Become a Better
    Investor
   How to Use Technological Advances to Mechanically
    Create Incredible Portfolios
Do These Opportunities Exist for
Everyone?
 Many investment opportunities available today
  were formerly reserved for the ultra wealthy
 Today, many investors with portfolios of $250,000
  or greater can receive the same level of
  sophisticated investment services
 The days of relegating portfolio management to
  commission based brokers is no longer the only
  option
Thomas Edison Says…

 “Opportunity
 Is Missed By
 Most People
 Because It’s
 Dressed In
 Overalls And
 Looks Like
 Work”
Today’s Opportunity
                                    • You Requested Tickets to This
                                      Seminar Before Capacity was
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   for Retirement
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                      Decision #2
   Wo r t h O v e r
   $10,000 to Those                 • Request a Free, Guaranteed-
   Who Qualify                        to-be-Valuable Personal MAP
                                      for Retirement Report,
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Let’s get Started!

                     Luck


                     Skill


                     Lack of Skill
                     and luck
A Warning About What’s on the Horizon:


   Broker – Typically compensated by selling
    products for commissions.


   Advisor – Typically compensated for advice
    via fees.

  The overwhelming majority of “financial advisors” are
  actually brokers (agents). For them, sharing the information
  covered in today's meeting would be akin to suggesting
  you’d be better off elsewhere – which is not likely to occur.
 Four Primary Differences Between Wealthy
 Investors and Most Others…
  Many Wealthy Investors Do Not Use Mutual Funds
   as a Primary Investment Vehicle
  Many Wealthy Investors Do Not Use Bank Money
   Managers
  Many Wealthy Investors Do Not Use Commission
   Based Brokers & Financial Planners
  Many Wealthy Investors Do Not Use Wrap
   Accounts


While there are certainly exceptions to these rules, we’ve come to this conclusion after personally meeting with hundreds of High
Net Worth Investors as described by the SEC definition of High Net Worth Investors.
How to Identify Market Trends to Avoid Massive
Losses and Capitalize on Opportunities




                                       Brand
                     Age 70
   IRA                                New Tax
                      1/2
                                      Problems
Using a Restricted Management Account to
Reduce Taxation on Qualified Retirement Plans
What is a Restricted Management Account (RMA)?
 Investment account:
   Established with a bank/trust company
   Designed for long term investment
 Contains restrictions
   Access to principal and income
   Investment decisions
   Termination/transfer of account
Benefits of the RMA
 Valuation Discounts
 Transfer tax savings
 Income tax savings (IRAs and Qualified Plans)
 Ease of creation
 Ease of management
 Long term investment
 Keeps family capital together
 Inexpensive to own and operate
What assets can be in an RMA?
 Assets that can be owned in an RMA include:
   Cash
   Stocks
   Bonds
   Real Estate (Fee ownership, REITS, etc)
   Private Equity
   Hedge Funds
   Life insurance and Annuities
   Other investment assets
Costs and Fees
 RMA fees generally run from ½% - 1%
 Fee based on account size
 Legal and Valuation fees - varies based on
   Time involved
   Value added
   Complexity
What are the Potential Benefits?
 Discounts vary based on the contract terms
 May be as high as 40%
 So if an IRA owner has $500,000 they want to
  convert to a Roth IRA over 5 years and pays a 25%
  effective tax rate, the tax savings on the conversion
  alone could be $50,000
 These savings compounding at 8% annually for 10
  years would amount to $116,581.90


  8% annual growth rate is for illustrative purposes only and does not represent an actual investment. Investment results may vary greatly and as
  with most investments there is a possibility of loss; including the loss of invested principal. Before attempting this or any complex tax
  planning strategy be sure to consult with properly licensed and educated professionals.
How to Identify Market Trends to Avoid Massive
Losses and Capitalize on Opportunities




                                      Watch
  Buy               Hold
                                       Out
Investor Information
 Strategy performance is simulated and not representative of
 actual investor results. Returns assume that all dividends
 received during a year are reinvested monthly. Actual portfolio
 performance will vary from that of investing in the strategy
 stocks because it may not be invested equally in these stocks and
 may not be fully invested at all times. It is important to note that
 the strategy may under perform the indices in certain years and
 may produce negative results. The S&P 500 is a broad market
 index comprised of 500 large domestic stocks and cannot be
 invested into directly. Illustrations of investment performance
 are purely hypothetical and do not reflect actual performance of
 RWA, Inc. clients or others. Advisers fees, taxes and trading
 costs will reduce performance of any strategy. For complete
 details of RWA, Inc. fees please request a copy of our Form ADV
 part II and Schedule F.
Costly Bear Market Investing Habits of
the Ordinary Investor

      The Dow Jones Industrial Average
            From 1921 To 1940:
The Dow Jones Industrial Average
From 1928 to 1955:
The S&P 500 From
1970 to 1982:
The NASDAQ
From 1997 to 2004:

             THE SUMMIT
Buy And Hold Or
Buy And Homework
Moving Average
 • Monitor price change from day to day
 • Calculate 200 day moving average
     Daily price added for last 200 days
     Divide number by 200 to get moving average
DOW JONES 1928 - 1932
S&P 500 1971-1975
S&P 500 1993 - 1996
DOW - 1987
S&P 500 1997 – 8/2006
All Applications of how to Avoid Costly
Money Management Mistakes are Outlined
in the Personal MAP Report
Academic Knowledge of the Wealthy…
 A Gamblers Paradox
 The Mathematical
  Formula for
  Determining if
  Money Will Last
 Mechanical Asset
  Management
  Systems
A Gamblers Paradox

From 1950 through 2006 the S&P 500 index rose in value
53.6% of trading days and fell 46.4% of trading days.




   Source: Crestmont Research, www.crestmontresearch.com
Mathematical Equations to Calculate the
Likelihood of Retirement Success

Monte Carlo Bootstrap Simulations will assist in
determining the viability of your investment plan




   Bootstrap re-sampling is a type of Monte Carlo simulation, a technique which allows for random sampling of
   historical stock, bond and cash returns while incorporating historical inflation. This statistical method is non-linear
   and allows for the assignment of probabilities to various outcomes. All values are expressed in today’s dollars.
   Investments in securities involve the risk of loss and no assurance can be given that these returns will be achieved.
A Complimentary, Personalized Monte Carlo Simulation is
available with the Personal MAP Report
Investor Information
   Strategy performance is simulated and not representative of
   actual investor results. Returns assume that all dividends received
   during a year are reinvested monthly. Actual portfolio
   performance will vary from that of investing in the strategy stocks
   because it may not be invested equally in these stocks and may
   not be fully invested at all times. It is important to note that the
   strategy may under perform the indices in certain years and may
   produce negative results. The S&P 500 is a broad market index
   comprised of 500 large domestic stocks and cannot be invested
   into directly. Illustrations of investment performance are purely
   hypothetical and do not reflect actual performance of RWA, Inc.
   clients or others. Advisers fees, taxes and trading costs will
   reduce performance of any strategy. For complete details of RWA,
   Inc. fees please request a copy of our Form ADV part II and
   Schedule F. Carefully consider your investment objective, risk
   and investment experience before implementing any investment
   strategy.
Most Money
Managers Fail…
 According to Lipper, Inc. Data, as of June 30, 2006
 the S&P 500 Index Performed Better than Most
 Actively Managed Large Mutual Funds:
   63.9% the last year
   67.6% the last 5 years
   77.9% the last 10 years
   82.6% the last 20 years
And Most Investors
do Even Worse…

Investor Returns vs Total                                     through 10-31-06

Returns

                     Investor Total Return                 % Rank in
                    Return %             %                Category **
1-Year                      11.53       10.17                                    37
3-Year
                            0.98        2.09                                     76
Annualized
5-Year
                            -0.73       0.78                                     75
Annualized
10-Yr
                             1.45       9.65                                     32
Annualized*
                                    FSELX via www.quicktake.morningstar.com
                                                       *Data through 10-31-06
                                               **Data refer to Investor Returns
So now that we have all of this statistical data –
what do we do with it?
Now… Investing Like a Real Nerd
Pioneers:
    Dr. James Simons – One of the
     400 wealthiest individuals in the
     world. Harvard undergrad, with
     PhD in Mathematics from Berkley
     and former Mathematics
     Professor at MIT, SUNY and
     Harvard. Most of his firms
     investments are closed to new
     investors, those that are open
     require $20 Million Minimum
     Investment. His Largest private
     equity fund has averaged 34.2%
     annually since 1988.
    The Late Mr. Robert Van Kampen
     – First to package formula-based
     investments for retail investors.

   Source - http://www.financialnews-us.com/?contentid=535244 December 2005
   Target Dividend
   Investment Formula
 Begin with 100 High Dividend Paying Stocks that make
        Up the Dow Jones Select Dividend Index


From 12/31/1996 to                                                    Stocks must have total market
12/31/2006 This                                                     capitalization of $5 Billion or greater

Strategy Would
Have Returned it’s                                              Remaining stocks are ranked by their
                                                              Return on Assets over the past 12 months
Investors an
Average Annual
                                                              Remaining stocks are ranked by their Price
Return of 16%*. The                                            To Book Ratio over the past 12 months
S&P 500 returned
8.42% per year                                       Based on these factors strategy selects the 20
during the same                                  top rated stocks overall and holds them for 12 months
period.                    * This is not actual results of an investor portfolio; nor any investment client of RWA, Inc. Past performance is no guarantee of future
                           results. FormulaFolios investment strategy returns are simulated returns based on quantitative analysis of equity markets and are not
                           actual results of an investor. Simulated results do not take into account transaction costs, fees, or ability for an advisor or investor to
                           sustain the process for any amount of time. Investing in equities involves substantial risk, including the risk of losing investment
                           principal. The S&P 500 and DJIA are unmanaged indexes and cannot be invested into directly.
  Target Dividend Formula*
  VS. The Markets
                                         Dividend Growth                                       S&P 500                                   DJIA
                                            Portfolio™

     3 Year*                                        12.25%                                      10.43%                                8.43%

     5 Year*                                        13.08%                                       6.18%                               6.80%

     10 Year*                                       15.97%                                       8.42%                                8.93%


     15 Year*                                      16.99%                                       10.63%                              12.00%
* This is not actual results of an investor portfolio; nor any investment client of RWA, Inc. Past performance is no guarantee of future results. Past performance is
no guarantee of future results. FormulaFolios investment strategy returns are simulated returns based on quantitative analysis of equity markets and are not actual
results of an investor. Simulated results do not take into account transaction costs, fees, or ability for an advisor or investor to sustain the process for any amount
of time. Investing in equities involves substantial risk, including the risk of losing investment principal. The S&P 500 and DJIA are unmanaged indexes and cannot
be invested into directly.
              Target Dividend Investment Strategy
              continued…



               $100,000 invested from 12/31/1991
               to 2/28/2007 would have grown to
               $1,042,620 with all dividends
               reinvested.* The S&P 500 would
               have grown to $453,080.


* This is not actual results of an investor portfolio; nor any investment client of RWA, Inc. Past performance is no guarantee of future results. Past performance is
no guarantee of future results. FormulaFolios investment strategy returns are simulated returns based on quantitative analysis of equity markets and are not actual
results of an investor. Simulated results do not take into account transaction costs, fees, or ability for an advisor or investor to sustain the process for any amount
of time. Investing in equities involves substantial risk, including the risk of losing investment principal. The S&P 500 and DJIA are unmanaged indexes and cannot
be invested into directly.
Other Formula Based Investment Strategies


  DJIA Target 10
  Valueline™ 25
  Small/Mid Cap 60
  International 15
  S&P Target 10
In Conclusion…




“Opportunity Is Missed By Most People
Because It’s Dressed In Overalls And
L o o k s      L i k e    W o r k ”
                        -Thomas Edison
    “What Should I Do NOW?”

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Thank you, good night and good luck!




                                     Be Smart
                         Be
                       Patient


                                    Be
                                 Thorough




                    Become a Better Investor

				
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posted:8/13/2011
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