One of the largest and most respected money managers in the world has recently issued their 2023 Outlook for both the economy and the markets. If you have trouble reading it it can be downloaded by clicking the Download link below the report.

How have your investments performed compared too…

The question above is one of the most frequently asked questions we get from our clients. The thought behind the question is basically, “Are my investments doing better than if I invested them in an index fund” That is a fair question, if the only thing we did was invest money. As financial planners we work with varied clients in many capacities, some of them are:

  • Helps create long-term strategies for reaching your financial goals
  • Help design an investment portfolio, then track, manage and balance the investments that will fund your financial goals
  • Provide helpful advice on lots of other financial issues and decisions
  • Retirement planning (including Social Security, Medicare & Long term care advice)
  • Tax Planning
  • Estate planning
  • Inheritance & Legacy planning

What don’t you see on this list? Beat the market. Depending on how you invest, it is unlikely you will consistently beat the market. Beating the market is not an investment strategy.

Do you work, save, invest and pay off your debts so that one day when you are older… you can beat the market? Nope. You work, save, invest and become debt free so you can live a life of financial peace and retire comfortably. You financial planner helps you devise a strategy that has a reasonable chance to attain those goals. They adjust your plan as “life happens”, making changes that address issue as they crop up AND helping you AVOID mistakes that could derail your goals.

Let me clarify why a diversified portfolio is not likely to beat the market. First, we must define what we mean when we say “the market”. Is it?

  • S&P 500 Total Market Index or S&P 500
  • Dow Jones Total Market Index or Dow Jones Industrial
  • MSCI All Country World Index
  • Wilshire 5000

Those of you who are invested with us know that for growth investing we pattern your portfolio after the Dave Ramsey model.

  • 25% Growth & Income
  • 25% Growth
  • 25% Aggressive Growth (smaller companies0
  • 25% International

That portfolio’s performance can at times vary substantially from S&P 500. The S&P 500 is primarily large U.S. companies, over 20% of the index is invested in 5 companies (Apple, Microsoft, Amazon, Tesla, Google). Where as the portfolio Dave Ramsey recommends (and we model) is made up of small capitalization (cap), mid cap & large cap companies from the US and all over the world.

Dave Conley, CFP