Worried about your investments heading downhill?<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Worried about your investments heading downhill?<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Worried about your investments heading downhill?<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
Worried about your investments heading downhill?<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
My Name Financial
Worried about your investments heading downhill?<Adviser’s Name>
<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd
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6
Disclaimer
Important Notice
RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services Licence Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts.
The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.
7
Contents
1. Timing the market
2. Recovery from market crisis
3. Short term volatility vs long term consistency
4. Benefits of diversification & asset class returns
5. Financial planning strategies
8
1. Timing the market
Time In Versus Timing
Missing the best trading days can significantly affect returns.
All Ordinaries Accumulation Index 31/12/1998 to 31/12/2008
$5,000
$15,000
$25,000
$35,000
Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08
All days $19,943
Minus 10 best days $12,701
Minus 20 best days $8,867
Minus 30 best days $6,766
Source: Iress
9
2. Recovery from market crises
Source: Iress
1987 Share Market CrashUS market
Time to recover: 22 months
15001700190021002300250027002900
01-Sep-87
01-Nov-87
01-Jan-88
01-Mar-88
01-May-88
01-Jul-88
01-Sep-88
01-Nov-88
01-Jan-89
01-Mar-89
01-May-89
01-Jul-89
Do
w J
on
es
10
2. Recovery from market crises
Asian Financial Crisis 1997Time to recover: 55 days
9000
9500
10000
10500
11000
11500
22
-Oct
-97
29
-Oct
-97
05
-No
v-9
7
12
-No
v-9
7
19
-No
v-9
7
26
-No
v-9
7
03
-De
c-9
7
10
-De
c-9
7
17
-De
c-9
7
24
-De
c-9
7
31
-De
c-9
7
S&
P/A
SX
300 A
ccum
ula
tion Index.
Source: Iress
11
2. Recovery from market crises
9/11 Terrorist Attacks on the USTime to recover: 26 days
14000
14500
15000
15500
16000
16500
11
-Se
p-0
1
13
-Se
p-0
1
15
-Se
p-0
1
17
-Se
p-0
1
19
-Se
p-0
1
21
-Se
p-0
1
23
-Se
p-0
1
25
-Se
p-0
1
27
-Se
p-0
1
29
-Se
p-0
1
01
-Oct
-01
03
-Oct
-01
05
-Oct
-01
07
-Oct
-01
09
-Oct
-01
11
-Oct
-01
13
-Oct
-01
15
-Oct
-01
17
-Oct
-01
S&
P/A
SX
300
Acc
umul
atio
n In
dex.
Source: Iress
12
3. Short term volatility vs long term consistency – Australian Equities
Source: S&P/ASX300 Accumulation Index, Iress
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Dec-
85
Dec-
86
Dec-
87
Dec-
88
Dec-
89
Dec-
90
Dec-
91
Dec-
92
Dec-
93
Dec-
94
Dec-
95
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
Dec-
04
Dec-
05
Dec-
06
Dec-
07
Dec-
08
Volatility of shares - Australian market Rolling periods from 31 December 1985 - 31 December 2008
1 year
10 years
13Source: MSCI World Accumulation Index, Iress
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Dec-
85
Dec-
86
Dec-
87
Dec-
88
Dec-
89
Dec-
90
Dec-
91
Dec-
92
Dec-
93
Dec-
94
Dec-
95
Dec-
96
Dec-
97
Dec-
98
Dec-
99
Dec-
00
Dec-
01
Dec-
02
Dec-
03
Dec-
04
Dec-
05
Dec-
06
Dec-
07
Dec-
08
Volatility of shares - US market Rolling periods from 31 December 1985 - 31 December 2008
1 year
10 years
3. Short term volatility vs long term consistency – US Equities
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Diversification can create more consistent returns
Australian shares
Global shares
Australian property securities
Australian fixed interest Cash
1989 17.4% 26.0% 2.3% 14.9% 18.5%
1990 -17.5% -15.1% 8.7% 19.0% 16.1%
1991 34.2% 20.2% 20.1% 24.7% 11.2%
1992 -2.8% 4.5% 7.0% 10.4% 6.9%
1993 40.5% 24.4% 30.1% 16.3% 5.4%
1994 -8.8% -8.1% -5.6% -4.7% 5.4%
1995 20.7% 25.9% 12.7% 18.6% 8.0%
1996 14.3% 6.3% 14.5% 11.9% 7.6%
1997 11.4% 41.1% 20.3% 12.2% 5.6%
1998 8.5% 32.1% 18.0% 9.5% 5.1%
1999 19.3% 17.1% -5.0% -1.2% 5.0%
2000 6.2% 2.2% 17.8% 12.1% 6.3%
2001 10.5% -9.7% 14.6% 5.4% 5.2%
2002 -8.6% -27.2% 11.8% 8.8% 4.8%
2003 15.0% -0.5% 8.8% 3.0% 4.9%
2004 27.9% 10.3% 32.0% 7.0% 5.6%
2005 22.5% 17.0% 12.5% 5.8% 5.7%
2006 24.5% 11.7% 34.0% 3.1% 6.0%
2007 16.2% -2.1% -8.4% 3.5% 6.7%
2008 -38.9% -25.3% -54.0% 14.9% 7.6%
Average 8.9% 5.9% 7.5% 9.5% 7.3%
Timeframe: 31/12/89 - 31/12/2008
Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBSA Bank Bill Index (Post Apr 87)
Source: RBA, IRESS
15
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08
4. Asset class returns - Historical
Timeframe: 31/12/88 - 31/12/2008
Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBSA Bank Bill Index (Post Apr 87)
Source: RBA, IRESS
Growth of $10 000 over 20 years
Australian shares $54,970Global shares $31,620
Australian property securities $42,111Australian fixed interest $61,917Cash $41,151
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5. Financial planning strategies
Given the recent market volatility, the following are some possible options for further discussion:
• Re-visit your Investor profile– Risk Profile
• Re-balance your portfolio– Growth vs Defensive to Strategic Asset Allocation
• Set up a Regular Investment Plan– Dollar Cost Averaging
• Pension Drawdowns– Use of defensive asset classes for funding pension income
Thank you