Realistic expectations

Helping you to develop realistic expectations can be one of the major benefits of working with a financial advisor.

We can help you to determine what you can realistically expect to live off of during your retirement or how much is a realistic amount that you need to save for a financial goal, such as college funding or your retirement.

We realistically expect that the future is uncertain. We know that finances can be confusing and difficult to understand. It is realistic for you to ask us in assisting with all the uncertainty and complexity and provide you with realistic solutions.

You are not being realistic if you plan to withdraw 7-10% annually of your investments during your retirement years. Academic research guides us to advise you to a more realistic annual withdrawal percentage, such as 4-5%. If you have a $2 million dollar portfolio, you should be able to comfortably withdraw $80,000 per year with a diversified and balanced portfolio and not run out of money.

Realistic expectations should include being prepared for bad periods of the stock market. We remind clients that the stock market has declined around 20% or more, once every 5 years, on average, since World War II. If you are not mentally prepared for this type of decline, which can occur at any time, even when you least expect it, you may not have realistic expectations.

You can realistically expect us to provide you advice that is in your best interest, even if it’s not in our best interest. We have a legal obligation to act as a fiduciary, to provide advice that is in your best interest. It is important that you understand that other types of financial professionals may not have to adhere to this higher standard of advice. Most national brokers and financial consultants working at a bank or insurance company do not have to act in your best interest.

We believe that in the long run, having a globally diversified portfolio will provide you with greater expected future returns than holding a portfolio of just large US stocks, such as the S & P 500. However, we want you to realistically expect that there may be periods or years when a US based portfolio will outperform a globally diversified portfolio.

We believe that in the long run, owning a globally diversified portfolio, with a tilt towards small companies and value companies, both in the US and Internationally, will provide you with greater expected returns. However, we want you to realistically expectthat there may be periods or years when these small and value “premiums” do not appear.

We encourage you to ask us questions and for guidance about a wide range of financial areas, so you can strive to be more financially realistic and make good decisions.

We think the more realistic that you are, the better long-term investor that you will be. And hopefully, happier, more secure and more successful.

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