By: Jeffery Voudrie
Abstract : Hey Guys, it turns out performance really does matter! No, I’m not talking about what you think—I’m referring to the performance of your investments! One mistake people often make is forgetting that investment performance impacts their lifestyle. Why are you investing in the first place? You have a goal or a dream that you want to accomplish. For some of my clients that dream is to have the financial freedom to travel and to explore, to go and see and do. For others that dream is having the financial freedom to be at home and spoil their grandchildren. What’s your dream? It might be having enough money to pay for your children’s college education, help them start a business or buy their first home. Maybe it’s retiring early so you can bicycle across America. Your dreams are the end game; investing is only the means to reach them. That’s why performance really does matter. The return on your investments determines when and if you live your dream. The better your performance the sooner your dreams will be realized. When you invest you accept a certain level of risk. Not all investments at that level of risk will perform the same. Most will perform average. Some will perform less than average while others return more than average. Selecting the investment that performs above average versus one that is an under-achiever can dramatically affect how long it takes to reach your goals. Ted is 50 years old and his dream is to have a nest egg big enough to allow him and his wife, Darlene, to live comfortably for the rest of their lives. They would like to retire as soon as they can and pursue their dream of being missionaries. Proper planning determines they need $750,000 to live their dream. They’ve worked hard, sacrificed to build up their retirement savings and have accumulated $375,000 already. Their return will determine how long it takes. Let’s assume that Ted has a choice of three similar investments. One is a poor performer and only averages 5% per year. If he chooses that one, Ted will have to work until he is 64 years old. The second performs average and earns 7% per year allowing Ted to retire at age 60. And if the third was at the head of the class and averaged 10% per year they could be missionaries at age 57. By the way, we’re assuming they don’t add to their retirement savings. Think about that! By improving the performance of their nest egg Ted can retire 7 years sooner. Do you really want to prolong your retirement an additional 7 years? Increasing your performance just a small amount will, over time, allow you to reach your goal sooner. When many of my clients first met with me they were in average performing investments. By spreading their nest egg among several different investment baskets we reduced their overall risk. Then by focusing on each individual investment and searching far and wide for those that had consistently performed at the head of the class we were able to improve their return. The result is that they will be able to reach their dreams sooner than they otherwise would have. How can you reach your dreams sooner? Make sure you pay close attention to the performance of your investments. It is especially easy to see how mutual fund and variable annuity investments rank through Morningstar. I’ve provided links to each on my website at www.guardingyourwealth.com. For instance, a Morningstar report will tell how a mutual fund’s performance ranks with all other mutual funds that have the same objective. It provides an independent, objective report that will let you know how well your investments have performed. It will also help you see whether your advisor is doing a good job for you. Your investments should consistently rank in the top 10-15% of similar investments. Check the rank before you invest but then monitor the rank every 6 months. If your investments aren’t performing then you maybe you should look for a different advisor because, hey guys, it turns out performance really does matter! I want to hear from you. Share your own investing experiences, your story might even be the basis of a future article! For free, clear, unbiased advice send your questions or your personal story at www.guardingyourwealth.com/askjeff.htm. SPECIAL REPORT: Over 80% of equity-indexed annuities purchased in America come from Allianz, which skims billions of dollars per year from unsuspecting folks (most of whom are seniors) all over the country. Chances are very good that you, or someone you know, has been pitched on this particular product by an agent. In my brand new report (just released), I pull back the curtain on the shady practices being used to pawn this deceptive and deceitful product off on innocent investors. Click here for your complimentary copy: http://www.guardingyourwealth.com/SpecialReports/Allianz.htm Mr. Voudrie is a Certified Financial Planner, nationally syndicated newspaper columnist and President of Legacy Planning Group, Inc., a Private Wealth Management Firm in Johnson City, TN. He can be reached toll-free at 1-877-827-1463 or at jeff@guardingyourwealth.com.
