We have a lot of clients that own real estate investments as another way to provide investment income and grow their net worth. I can appreciate the tax advantages and diversification of owning investment property; in fact, my wife and I have acquired a few income properties over the past ten years.
We had a client commit $10,000 to try out our Long/Short CEF-Arb strategy on March 28, 2016. One year later, on March 31st, their account was valued at $11,315—up over 13%, after fees. The biggest swoon the account experienced was a drop of 2.9% in October. That compares to the S&P 500, which saw a 17% return in the same 12-month timeframe, but experienced a drop of 6% in June. This is what the investment world would call a good upside/downside ratio. We captured 76% of the market’s move up, but only 48% of the move down. A golden goose? Almost!
We’ve been excited about the movement toward automated, fiduciary investment advice, sometimes called robo-advice, since we saw what WealthFront.com had to offer more than five years ago. I remember looking over Joyce’s shoulder as I walked her through their site, with her jaw dropping to desktop. Now, the likes of Vanguard and Charles Schwab are taking the lead from those first-to-market robos, including Betterment and Wealthfront.
All of our offerings—including Essentials, which is free—will include Retirement planning, real-time net worth tracking, budgeting, cash flow analysis, investment allocation analysis, an estate planning checklist, a private document vault, and real-time links to investment, bank, and credit accounts. We’ll also be able to assign and complete planning tasks right within the application. You can consider it similar to Mint.com, only better: complete with interactive planning features from your friends at Sommers Financial Management.
I just completed a review of how each of our Model Portfolios performed in 2016, the first full year in which we’ve used them with a majority of our clients. As some background, we use Riskalyze to determine our client’s tolerance for volatility, balanced against their desire for high returns. Once clients are assigned a Risk Number between 1 and 100, we can then match each client to one of our Model Portfolios with a similar Risk Number.
As we enter 2017, it’s a chance to take some time to reflect on the past year and think about our hopes and dreams with the flip of another calendar year. There were likely some happy surprises, and some hard challenges in 2016. Do you ever stop to think what you have control over, and those things that are completely out of your control?