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Missed Fortune – The Folly of “Long-Haul” Advisors

Posted on | April 4, 2010

“You’re In It For The Long Haul”: A Lame Excuse For Poor Performance

Many financial professionals have been saying in various media sources that we’re in a market recovery.

This latest “I told you so” rally is intended to prove that if people would just listen to them and wait out market downturns, everything turns out all right.

They point out that if people would have just “hung in there,” they would have received a 43% return since September 2008.

But let’s analyze this to see what’s really going on. We’ll compare this traditional advice to the Missed Fortune strategies.

Suppose you had $100,000 invested in the market at the beginning of 2007. Most people received an 8 percent return in 2007, which means that you would have ended the year with $108,000.

But in 2008, most Americans lost 31 percent of their investments. Your $108,000 would have dropped $33,480 to a balance of $74,520 by the end of 2008.

Now, following the “You’re in it for the long haul” advice, you keep your money invested in the market.

Assuming the traditional advisors are right and you would have earned a 43 percent return in 2009, you would have gained about $32,000, for a final balance of $106,563.

When you average out that three-year period, it comes to about a 2 percent average rate of return.

Now consider what you would have experienced had you followed the Missed Fortune advice instead.

You start with $100,000. In 2007 you would have earned 8 percent, for the same ending balance of $108,000.

However, in 2008 you would not have lost a dime — you’d still be left with $108,000.

In 2009 you would have made a 16 percent rate of return. This would put your balance up to $125,290.

Bottom line: Following the Missed Fortune strategies instead of traditional strategies would have made you an additional $18,727 in the same three-year period.

What’s more, in these first few months of 2010 our clients have already locked in another 16 percent, so in this example the account balance would now be up to $143,324.

But it gets even better than this. Why? Because you need to factor in taxes to the equation.

Following traditional advice, either this account would have been fully taxable, or at best tax-deferred.

But with Missed Fortune strategies, your accounts grow tax free and provide tax-free withdrawal.

So what’s it going to be for you? Poor and volatile returns with traditional advice, or steady and healthy returns with Missed Fortune?

Set up an appointment with a Missed Fortune advisor now to learn how to get off the traditional roller-coaster and onto the Missed Fortune gravy train.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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