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An investing and financial strategies blog offered by Gary Partoyan, veteran financial advisor and owner of Potomac Wealth Strategies, LLC.
Monday, April 24, 2017
Portfolio Model Performance Through March 2017
Wednesday, March 22, 2017
What is Asset Allocation?
"Asset Allocation" is the embodiment of and guidance offered
by some Nobel Prize-winning portfolio construction/management research:
·
Asset Allocation is how we most prudently aim for either the best gains
at a set level of risk or the least amount of risk for a targeted level of
gains.
o
Aggressive investors are about 95% stocks and 5% bonds/cash
o
Moderately Aggressive = 80/20
o
Moderate = 60/40
o
Moderately Conservative = 40/60
o
Conservative = 20/80
o
Most working folks our age and time-horizon are Moderate to Aggressive;
most retirees are Conservative.
·
Asset Allocation spreads out our investments across the strategic asset
classes and sub-classes thereof:
o
Stocks (large, medium, or small companies... growing companies or
well-established money-makers... USA,
developed-market foreign, developing markets...)
o
Bonds (corporate, government, domestic or foreign,
high-quality/low-interest or low-quality/high-interest, and so forth)
o
Commodities
o
Cash
o
How much into each determines portfolio.
Generally, high volatility is riskier and low volatility is safer, and
more risk is correlated with better returns while less risk usually means lower
returns. A typical retiree needs to be
safer, and professional with 20+ years to retirement can probably afford to
take more risk.
·
How to implement Asset Allocation
o
For my clients, I use mutual fund portfolios of my own design, allocated
according to the strategic asset allocation guidance of trusted sources
(usually it's Ibbotson's work that's now owned by Morningstar). Specifically, I offer clients my Strategic,
Schwab Index, and Flex portfolio models.
Each has a different take on how to implement Asset Allocation. Strategic III models are my preferred
portfolios now.
§ Over time,
we'll shift from Aggressive on down to Conservative--the closer you get to
retirement, the more conservative.
Usually about every 5-10 years we'll downshift by re-allocating the
portfolio.
§ I use
best-of-breed mutual funds to populate each part of the Asset Allocation of
each model.
o
"Target Date" funds do it all for you ongoing. You could put everything into a target date
fund and leave it there forever, and employer-sponsored retirement plans often
offer such and even put you into them automatically.
§ You're in a
"The 2045 fund can be used forever by anyone expecting to retire around
Year 2045.
§ But they
usually use only their own in-house products.
Your Nationwide Destination 2045 fund at work uses only Nationwide
products. The results have been very
good lately, but not as good over the long-term.
o
"Allocation Funds" are like Target Date funds in they are
total portfolios in one fund, but they don't change over time--an Aggressive
allocation fund remain so, so you'd exit that one and move into a Moderate or
Conservative fund as you get closer to the retirement year.
Garo Linck Partoyan
Potomac Wealth Strategies, LLC
Thursday, February 23, 2017
Portfolio Model Performance Through January 2017
| US and Foreign Indexes | 3 mo | 1 yr | 2 yr | 3 yr | 5 yr | 10 yr | 2008 | |
| Stock Markets (72-21-7) | 6.6% | 18.4% | 6.9% | 8.0% | 11.3% | 5.3% | -41.0% | |
| S&P 500 | 7.2% | 17.5% | 6.9% | 8.5% | 11.7% | 4.7% | -38.5% | |
| Dow Jones Industrial Avg | 9.5% | 20.6% | 7.6% | 8.2% | 9.5% | 4.6% | -33.8% | |
| MSCI EAFE | 4.0% | 8.9% | -1.4% | -2.0% | 3.1% | -1.9% | -45.1% | |
| MSCI EM | 0.5% | 22.5% | -2.8% | -1.0% | -2.3% | 0.1% | -54.5% | |
| Barclays Agg Bond--US | -2.0% | 1.5% | 0.6% | 2.6% | 2.1% | 4.4% | 5.2% | |
| Citi WGBI nonUSD (foreign bonds) | -5.2% | 2.2% | -0.5% | -2.2% | -2.0% | 2.9% | 10.1% | |
| Aggressive (90% stocks-10% bonds) | 6.1% | 16.2% | 3.8% | 4.4% | 7.2% | 3.4% | -36.0% | |
| 95 Strategic III | 5.7% | 17.3% | 6.3% | 7.5% | 10.5% | 7.6% | -30.9% | |
| 95 Schwab index | 7.4% | 18.3% | 6.6% | 7.0% | 10.8% | 5.6% | -34.3% | |
| 95 Strategic USA II | 8.2% | 20.4% | 8.2% | 9.4% | 12.9% | 9.6% | -25.8% | |
| Confluence Value Opportunities | -22.3% | |||||||
| Confluence Equity Income | -18.9% | |||||||
| WealthFront 9 | 5.0% | 18.2% | 4.4% | 5.1% | 7.3% | 4.3% | -38.1% | |
| American Funds Port Ser Growth | 6.1% | 18.7% | 6.8% | 7.1% | 11.5% | 6.1% | -40.8% | |
| American Funds Port Ser Global Growth | 4.5% | 15.5% | 4.2% | 4.7% | 9.7% | 5.4% | -40.5% | |
| Moderately Aggressive (75-25) | 4.9% | 13.9% | 3.3% | 3.9% | 6.3% | 3.6% | -31.0% | |
| 80 Flex IV | 2.9% | 11.6% | 2.4% | 2.8% | 5.5% | |||
| 80 Flex V | 3.8% | 10.2% | 2.2% | 3.0% | 6.7% | -16.9% | ||
| 80 Strategic II | 6.3% | 18.6% | 5.4% | 5.5% | 9.5% | 6.8% | -31.1% | |
| 80 Strategic III | 4.9% | 15.7% | 5.8% | 7.0% | 9.7% | 7.4% | -27.7% | |
| 80 USA tilt | 6.9% | 18.2% | 5.7% | 5.9% | 9.4% | 6.5% | -28.5% | |
| 80 Schwab index 2017 | 5.9% | 14.8% | 5.5% | 5.9% | 9.1% | 5.2% | -29.3% | |
| Money 75 | 5.9% | 18.7% | 6.0% | 6.3% | 9.2% | 5.9% | -32.7% | |
| American Funds Port Ser Gr+Inc | 4.4% | 14.7% | 5.0% | 6.3% | 9.5% | 5.3% | -30.8% | |
| Moderate (60-40) | 3.8% | 11.8% | 2.9% | 3.6% | 5.4% | 3.7% | 25.6% | |
| 60 Flex V | 3.5% | 10.0% | 2.8% | 3.4% | 6.9% | -13.1% | ||
| 60 Strategic III | 3.8% | 13.2% | 4.8% | 6.0% | 8.1% | 6.8% | -23.3% | |
| 60 Schwab index 2017 | 4.6% | 11.7% | 4.5% | 4.9% | 7.5% | 4.7% | -23.8% | |
| American Funds Port Ser Balanced | 3.1% | 11.4% | 4.4% | 5.5% | 8.3% | 5.3% | -28.4% | |
| Moderately Conservative (40-60) | 2.2% | 8.5% | 2.4% | 2.6% | 4.1% | 3.7% | -17.4% | |
| 40 Strategic III | 2.6% | 10.8% | 3.9% | 4.8% | 6.5% | 6.5% | -16.8% | |
| 40 Schwab Index 2017 | 2.9% | 7.7% | 3.0% | 3.3% | 5.1% | 4.0% | -16.2% | |
| Goldman Sachs Income Builder | 2.9% | 12.8% | 3.4% | 3.8% | 7.1% | 5.3% | -23.3% | |
| Conservative (20-80) | 0.5% | 5.5% | 1.5% | 1.8% | 2.4% | 3.5% | -8.4% | |
| 20 Strategic III | 0.8% | 7.3% | 2.6% | 3.3% | 3.9% | 4.6% | -9.3% | |
| 20 Schwab index 2017 | 1.2% | 4.0% | 1.9% | 2.4% | 3.4% | 3.3% | -9.2% | |
| NOTE 1: Past performance is no guarantee of specific future results. This data is presented by Potomac Wealth Strategies, LLC. This data is from Morningstar and should be accurate, but it has not been independently verified. | ||||||||
| NOTE 2: "Flex", "Strategic", and "Index" models are crafted/run by Potomac Wealth Strategies. They show history of better returns, lower volatility, or both--or, with the Index models, closer tracking--vs benchmarks and competitors. | ||||||||
| NOTE 3: "XX Schwab index" models are low-cost portfolios. They are comprised of index funds available free of transaction charges to my clients at Schwab. This is what many might recommend due to low-costs and portfolio efficiency. | ||||||||
| NOTE 4: Nothing on this blog post represents investment advice to any individual or organization. If the information hereon is of interest to you, please contact me at Garo.Partoyan@PotomacWealthStrategies.com for a consultation. | ||||||||
Wednesday, January 4, 2017
New Year Message + Reminders from Gary Partoyan
Happy New Year! I
hope your holidays were lovely and your 2017 is off to a great start.
A few things:
1.
It was a good year for many investment
categories. Our globally diversified StrategicIII model portfolios performed very well, beating their benchmarks in 2016
by more than enough to cost-justify my advisory fees. In fact, the Strategic III models have shown
that kind of outperformance in the 2-, 3-, 5-, and 10-yr time periods
also. This is how most of us should be
investing.
2.
Attached is my Financial Priorities checklist.
Use this to help us make sure we are covering the bases that are most
important for you.
a. Notice
that there are five priorities before
we even save for retirement.
b. Contact
me to go over this with you.
3.
Do you have your InvestmentPlan? Let us get a good look at
whether or not you are on track to meet your goals. Important and helpful, and no extra charge!
4.
Reminder that my firm is a Registered Investment Advisor (RIA) and I am the Representative of
my RIA. To each client, my firm and I
have a fiduciary obligation. I must act in each client's best interests. Of note:
a. As
an "advisor"
rather than a "broker", I am already subject to the standard of
the Department of Labor's upcoming "fiduciary rule".
i. The
rule is aimed at bringing other financial services firms/employees up to that
standard.
b. As
a fee-only RIA firm/representative, I am paid only by my clients and receive no
other compensation--no commissions, no revenue-sharing, no referral fees.
i. This
helps eliminate conflicts of interest and put the advisor and the client on the
same side of the table.
Please contact me with any questions or requests. Thank you!
--Gary
Potomac
Wealth Strategies, LLC
(703)
746-8195 phone
(855)
347-9483 fax
Investment/Financial Planning--Reminder!
For all my clients, I invest the money they have in accounts under my advice/management. I also provide investment/financial planning services, and it's included in my investment advisory fee. But not all my clients make use of that valuable service, so here's a reminder...
Do you know the following?
Thank you!
--Gary Partoyan
Potomac Wealth Strategies, LLC
1800 Diagonal Rd., Suite 600
Alexandria, Virginia 22314
(703) 746-8195
(855) 347-9483 fax
Garo.Partoyan@PotomacWealthStrategies.com
Do you know the following?
- how much to save
- which accounts to use
- what investments to make
- whether or not to save for college
- how much insurance for disability, life, and/or long-term care
- what pension and social security income are you going to receive
- should you buy or rent your home
- should you buy or lease your car
- do you really need to save for college
- what to do with inheritance, or proceeds from sale of a business
Thank you!
--Gary Partoyan
Potomac Wealth Strategies, LLC
1800 Diagonal Rd., Suite 600
Alexandria, Virginia 22314
(703) 746-8195
(855) 347-9483 fax
Garo.Partoyan@PotomacWealthStrategies.com
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