Wealthcare For Women

English: Monaco, Monte Carlo (Photo credit: Wikipedia)

Named after the games of chance in the casinos of Monte Carlo in Monaco, Monte Carlo Simulation (MCS) uses random sampling of returns to execute simulations for forecasting financial strategies. During an analysis using MCS, a large number of trials are performed using an expected return and standard deviation that the advisor (or client) has selected to constrain the data. By adjusting key variables (such as asset allocations, retirement spending needs, retirement age, etc.) and applying client priorities, the advisor may create a strategy with a high confidence in achieving goals in a variety of markets.

How do we apply Monte Carlo in the context of Wealthcare For Women?

The Wealthcare For Women process is designed to help women achieve their most important financial goals without needlessly sacrificing their lifestyle and while avoiding unnecessary investment risk. Wealthcare For Women planning is designed to help every woman live her life in financial security.

The priority assigned to each of a woman’s goals, along with the investment risk the client is willing to accept, combine to set the stage for the Monte Carlo Simulation analysis. In this analysis, we determine the likelihood the client may successfully achieve her objectives by simulating various market performances over the client’s lifetime and assessing the impact of these markets on the client’s most important financial goals.

This analysis, while complex, is easily understood by the summary numeric results described below:

• The Summary states the number of simulations that achieved an ending value greater than the target value. This number is also stated as the percentage of simulations in which the client’s valued goals were achieved or exceeded.
• In addition, the Summary states the number and percentage of simulations that ended below the targeted ending value but did not run out of money during the client’s lifetime.
• The Summary also states the number and percentage of simulations in which the plan ran out of money prior to the end of the planning period.

The results of the Monte Carlo Simulation analysis may also be expressed in terms of the Comfort Assessment, indicating whether the client may have confidence that the tested strategies will be comfortably achieved or whether the goals fall into Uncertainty or Sacrifice.

When I work with women in the Wealthcare For Women process, I repeatedly encourage them to focus on the things we can control like expenses, taxes, their goals and investment risk.

For things we can’t control, like the investment markets, MCS is a valuable tool to account for the uncertainty of investment returns while helping us make the most of your one shot at life.

To better understand the nature and scope of the advisory services and business practices of Wealthcare Capital Management, Inc., please review our SEC Form ADV Part 2a, which is available here. Past performance is not a guide to future returns. Before acting on any analysis, advice or recommendation in the above content, you should seek the personalized advice of legal, tax or investment professionals. By selecting the links in the above email, you are being redirected to third party websites not under the supervision of Wealthcare who may have different privacy policies than Wealthcare.

1941 Defense Bonds billboard exhibit installation 1995-1996 (Photo credit: national museum of american history)

You might find it curious that I don’t subscribe to the Wall Street Journal, Barron’s, Investors Business Daily or any financial magazines.

But I do consume a lot of news and information on a daily basis from a variety of sources.

One of my challenges with this weekly blog post is deciding which article I want to share with you. And I certainly don’t want to bombard you with half a dozen articles each week. A big part of my mission is to help simplify people’s lives – not add to the noise.

This week, I was prepared to share this article and my thoughts about it. Go ahead and check it out. I think you’ll find it interesting. It’s about being busy and spending time on the most productive activities vs just “being busy.”

However, I just read an article from a friend and colleague based in Raleigh, NC. His name is Sam Bass and he runs a firm called Beacon Wealthcare. We share very similar philosophies regarding investing and wealth management, and it’s no coincidence that we each work under the banner of “Wealthcare.”

In my opinion, Sam’s article is timely and a must read. It’s about Treasury Bonds which Sam and I both use for the fixed income portion of our clients’ portfolios. I can’t speak for Sam, but 7-10 Year Treasuries represent the fixed income component in my personal portfolio as well.

If you haven’t already, read the article, and if you have any questions about how this applies to your personal portfolio or wealth management plan, I’m available and happy to discuss it with you.

To better understand the nature and scope of the advisory services and business practices of Wealthcare Capital Management, Inc., please review our SEC Form ADV Part 2a, which is available here. Past performance is not a guide to future returns. Before acting on any analysis, advice or recommendation in the above content, you should seek the personalized advice of legal, tax or investment professionals. By selecting the links in the above email, you may be redirected to third party websites not under the supervision of Wealthcare who may have different privacy policies than Wealthcare.

Today, I’m excited to introduce you to Kathleen Rehl.

Kathleen is a speaker, author and coach in addition to her work as a financial planner.

After her husband passed away in 2007, Kathleen has embraced a mission to educate and support other widows and those that want to be prepared for widowhood in the future.

You can learn more about Kathleen by visiting her website at KathleenRehl.com.

Recently, Kathleen and I had a brief conversation and recorded it for you:

If you have any questions or comments for either of us, please share them below.

Thanks for watching.

To better understand the nature and scope of the advisory services and business practices of Wealthcare Capital Management, Inc., please review our SEC Form ADV Part 2a, which is available here. Past performance is not a guide to future returns. Before acting on any analysis, advice or recommendation in the above content, you should seek the personalized advice of legal, tax or investment professionals. By selecting the links in the above email, you may be redirected to third party websites not under the supervision of Wealthcare who may have different privacy policies than Wealthcare.

Why do people continue to put money in hedge funds even though they cost more and return less than other, more common investments?

Maybe it’s because even smart people are stupid sometimes.

Thankfully, I know you’re smart because you’re reading my blog

So let’s talk about average returns . . .

“Average return” is exactly what you think it is. It’s the average of returns for an investment over a period of time.

And while you’ll certainly experience an average return over time, you won’t experience that average each and every year. In fact, your returns can vary widely from year to year, and it is your actual sequence of returns that will have a huge impact on your dollar wealth.

That’s why I’d like to introduce you to the Monte Carlo card game.

I’d like to ask you to click the link above and spend some time playing around with this tool. Simply click through the menu in the upper left corner of the screen and follow the on-screen instructions. Any questions? Let me know.

For those that like to jump to the last page of a book to find out how the story ends, here you go:

Most advisors, planners, and other financial professionals spend all their time talking about returns. Percentage returns. Average returns. Historical returns. Expected returns.

But here’s the thing: you can’t spend returns at the grocery store. You can only spend dollars.

That’s why I believe it’s important to look at the impact of financial decisions on your dollar wealth. Besides, average returns only tell us what happened in the past. They provide absolutely no clue about what will happen in the future. And if someone tells you otherwise, they’re fooling you, fooling themselves or probably both.

If you’d like to see the potential impact of return sequences on your savings or spending plan, get in touch and let’s have a conversation about it.

To better understand the nature and scope of the advisory services and business practices of Wealthcare Capital Management, Inc., please review our SEC Form ADV Part 2a, which is available here. Past performance is not a guide to future returns. Before acting on any analysis, advice or recommendation in the above content, you should seek the personalized advice of legal, tax or investment professionals. By selecting the links in the above email, you may be redirected to third party websites not under the supervision of Wealthcare who may have different privacy policies than Wealthcare.

To better understand the nature and scope of the advisory services and business practices of Wealthcare Capital Management, Inc., please review our SEC Form ADV Part 2a, which is available here. Past performance is not a guide to future returns. Before acting on any analysis, advice or recommendation in the above content, you should seek the personalized advice of legal, tax or investment professionals. By selecting the links in the above email, you are being redirected to third party websites not under the supervision of Wealthcare who may have different privacy policies than Wealthcare.