Worried about your investments heading downhill? is an Authorised Representative of RI Advice Group...

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6

Disclaimer

Important Notice

RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services Licence Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts.

The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.

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Contents

1. Timing the market

2. Recovery from market crisis

3. Short term volatility vs long term consistency

4. Benefits of diversification & asset class returns

5. Financial planning strategies

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1. Timing the market

Time In Versus Timing

Missing the best trading days can significantly affect returns.

All Ordinaries Accumulation Index 31/12/1998 to 31/12/2008

$5,000

$15,000

$25,000

$35,000

Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08

All days $19,943

Minus 10 best days $12,701



Source: Iress

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2. Recovery from market crises

Source: Iress

1987 Share Market CrashUS market

Time to recover: 22 months

15001700190021002300250027002900

01-Sep-87

01-Nov-87

01-Jan-88

01-Mar-88

01-May-88

01-Jul-88

01-Sep-88

01-Nov-88

01-Jan-89

01-Mar-89

01-May-89

01-Jul-89

Do

w J

on

es

10


Asian Financial Crisis 1997Time to recover: 55 days

9000

9500

10000

10500

11000

11500

22

-Oct

-97

29

-Oct

-97

05

-No

v-9

7

12

-No

v-9

7

19

-No

v-9

7

26

-No

v-9

7

03

-De

c-9

7

10

-De

c-9

7

17

-De

c-9

7

24

-De

c-9

7

31

-De

c-9

7

S&

P/A

SX

300 A

ccum

ula

tion Index.

Source: Iress

11


9/11 Terrorist Attacks on the USTime to recover: 26 days

14000

14500

15000

15500

16000

16500

11

-Se

p-0

1

13

-Se

p-0

1

15

-Se

p-0

1

17

-Se

p-0

1

19

-Se

p-0

1

21

-Se

p-0

1

23

-Se

p-0

1

25

-Se

p-0

1

27

-Se

p-0

1

29

-Se

p-0

1

01

-Oct

-01

03

-Oct

-01

05

-Oct

-01

07

-Oct

-01

09

-Oct

-01

11

-Oct

-01

13

-Oct

-01

15

-Oct

-01

17

-Oct

-01

S&

P/A

SX

300

Acc

umul

atio

n In

dex.

Source: Iress

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3. Short term volatility vs long term consistency – Australian Equities

Source: S&P/ASX300 Accumulation Index, Iress

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

Dec-

85

Dec-

86

Dec-

87

Dec-

88

Dec-

89

Dec-

90

Dec-

91

Dec-

92

Dec-

93

Dec-

94

Dec-

95

Dec-

96

Dec-

97

Dec-

98

Dec-

99

Dec-

00

Dec-

01

Dec-

02

Dec-

03

Dec-

04

Dec-

05

Dec-

06

Dec-

07

Dec-

08

Volatility of shares - Australian market Rolling periods from 31 December 1985 - 31 December 2008

1 year

10 years

13Source: MSCI World Accumulation Index, Iress

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

Dec-

85

Dec-

86

Dec-

87

Dec-

88

Dec-

89

Dec-

90

Dec-

91

Dec-

92

Dec-

93

Dec-

94

Dec-

95

Dec-

96

Dec-

97

Dec-

98

Dec-

99

Dec-

00

Dec-

01

Dec-

02

Dec-

03

Dec-

04

Dec-

05

Dec-

06

Dec-

07

Dec-

08

Volatility of shares - US market Rolling periods from 31 December 1985 - 31 December 2008

1 year

10 years

3. Short term volatility vs long term consistency – US Equities

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Diversification can create more consistent returns

Australian shares

Global shares

Australian property securities

Australian fixed interest Cash

1989 17.4% 26.0% 2.3% 14.9% 18.5%

1990 -17.5% -15.1% 8.7% 19.0% 16.1%

1991 34.2% 20.2% 20.1% 24.7% 11.2%

1992 -2.8% 4.5% 7.0% 10.4% 6.9%

1993 40.5% 24.4% 30.1% 16.3% 5.4%

1994 -8.8% -8.1% -5.6% -4.7% 5.4%

1995 20.7% 25.9% 12.7% 18.6% 8.0%

1996 14.3% 6.3% 14.5% 11.9% 7.6%

1997 11.4% 41.1% 20.3% 12.2% 5.6%

1998 8.5% 32.1% 18.0% 9.5% 5.1%

1999 19.3% 17.1% -5.0% -1.2% 5.0%

2000 6.2% 2.2% 17.8% 12.1% 6.3%

2001 10.5% -9.7% 14.6% 5.4% 5.2%

2002 -8.6% -27.2% 11.8% 8.8% 4.8%

2003 15.0% -0.5% 8.8% 3.0% 4.9%

2004 27.9% 10.3% 32.0% 7.0% 5.6%

2005 22.5% 17.0% 12.5% 5.8% 5.7%

2006 24.5% 11.7% 34.0% 3.1% 6.0%

2007 16.2% -2.1% -8.4% 3.5% 6.7%

2008 -38.9% -25.3% -54.0% 14.9% 7.6%

Average 8.9% 5.9% 7.5% 9.5% 7.3%

Timeframe: 31/12/89 - 31/12/2008

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBSA Bank Bill Index (Post Apr 87)

Source: RBA, IRESS

15

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08

4. Asset class returns - Historical

Timeframe: 31/12/88 - 31/12/2008

Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 200 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Cash: 11am Cash Rate (Pre Apr 87) / UBSA Bank Bill Index (Post Apr 87)

Source: RBA, IRESS

Growth of $10 000 over 20 years

Australian shares $54,970Global shares $31,620

Australian property securities $42,111Australian fixed interest $61,917Cash $41,151

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5. Financial planning strategies

Given the recent market volatility, the following are some possible options for further discussion:

• Re-visit your Investor profile– Risk Profile

• Re-balance your portfolio– Growth vs Defensive to Strategic Asset Allocation

• Set up a Regular Investment Plan– Dollar Cost Averaging

• Pension Drawdowns– Use of defensive asset classes for funding pension income

Thank you

Worried about your investments heading downhill? is an Authorised Representative of RI Advice Group...

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