Contenu connexe Similaire à How to Invest Well (20) How to Invest Well1. Invest Well
Get $15,000 Managed For Free – http://wlth.fr/jeffr
Jeff Rosenberger, PhD @ R o s e n b e r g e r J e ff
w e a l t h f r o n t . c o m
3. ©2014 Wealthfront Inc.
SOURCE Source Title
3
Put First
Things First
SET YOUR PRIORITIES
• Diversify your company stock!
• Taxes, taxes, taxes!
• Establish an emergency fund!
• Pay down expensive debt!
• Buy a house!
• Invest to achieve your goals!
• Philanthropy & play money
IMAGE
5. ©2014 Wealthfront Inc.
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Putting The
Pieces Together
INVESTING WELL
HOW DO YOU
• Construct the Efficient Frontier!
• Assess your risk profile!
• Manage your portfolio over time!
• Be thoughtful about taxes
6. ©2014 Wealthfront Inc.
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Asset Allocation Is
The Starting Point
SOURCES OF RETURN
SOURCES Brinson et al (1986 & 1991), Ibbotson & Kaplan (2000)
Impact on Average
Portfolio Performance
Market Timing 2%
Security Selection 7%
Asset Allocation 91%
7. ©2014 Wealthfront Inc.
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Which Are The Best
To Include?
CHOOSING ASSET CLASSES
Experts
Recommend
US Stocks
Foreign Stocks
Emerging MarketsReal Estate
Natural Resources
Bonds
SOURCES Swensen (2005), Malkiel (2012) & Wealthfront
8. ©2014 Wealthfront Inc.
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The Value Of Greater
Diversification
CHOOSING ASSET CLASSES
US Stocks Foreign Stocks Emerging Markets Real Estate Bonds Natural Resources
Wealthfront used the following for its calculations: US Bonds (Barclays Capital US
Aggregate Bond Index), Foreign Stocks (MSCI EAFE Total Return Index), Emerging
Markets (MSCI Emerging Markets Total Return Index), Real Estate (NAREIT North
America Index), Natural Resources (DJ-UBS Commodity Index Total Return Index).
Wealthfront presents the information going back to 1987, which is the earliest date that
necessary data is available for all six of the asset classes being used.
10. ©2014 Wealthfront Inc.
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Mutual Funds
Underperform Index Funds
REPRESENTING THE ASSET CLASSES
SOURCES Amott et al., Journal of Portfolio Management 26, no. 4 (2000); Swensen (2005), Bogle (2009), Malkiel (2012)!
• Mutual funds underperform
2/3 lag their benchmark per year
• Lack of persistence
Outperforming funds underperform in subsequent years
• Underperformance is meaningful
Up to 2% annually!
11. ©2014 Wealthfront Inc.
11
We Recommend
Exchange-Traded Funds
REPRESENTING THE ASSET CLASSES
LOOK FOR INDEX ETFs WITH…
• Low Expenses
minimal expense ratio
• Minimal Tracking Error
closely matches the index
• Market Liquidity
can be traded efficiently
12. ©2014 Wealthfront Inc.
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Vanguard Has Many
Of The Best ETFs
OPTIMIZING THE MIX
Our ETF
Recommendations
VTI!
US Stocks
VEA!
Foreign Stocks
VWO!
Emerging Markets
VNQ!
Real Estate
DJP!
Natural Resources
MUB / BND!
Bonds
Wealthfront regularly surveys the ETF landscape and ranks ETFs
in each asset class using the criteria described in the prior slide.
Vanguard ETFs often come out on top. Wealthfront receives no
compensation for recommending Vanguard products or any
other ETFs.
SOURCE Wealthfront.com
13. ©2014 Wealthfront Inc.
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Allocations For Every
Risk Level
ASSESSING YOUR RISK PROFILE
SOURCE Wealthfront.com
US Stocks Foreign Stocks Emerging Markets Dividend Stocks Natural Resources TIPS
Municipal Bonds
TAXABLE ALLOCATION WEIGHTS FOR EACH RISK TOLERANCE LEVEL
14. ©2014 Wealthfront Inc.
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Two Measures
Of Risk
ASSESSING YOUR RISK PROFILE
SOURCES Vanguard.com and smartmoney.com
Objective Risk ToleranceSubjective Risk Tolerance
17. ©2014 Wealthfront Inc.
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Allocate Differently For Your
Taxable Assets…
BE THOUGHTFUL ABOUT TAXES
SOURCE Wealthfront.com
US Stocks Foreign Stocks Emerging Markets Dividend Stocks Natural Resources TIPS
Municipal Bonds
18. ©2014 Wealthfront Inc.
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…Versus Your IRA & 401k
BE THOUGHTFUL ABOUT TAXES
SOURCE Wealthfront.com
US Stocks Foreign Stocks Emerging Markets Dividend Stocks Real Estate TIPS
Corporate Bonds Emerging Market Bonds
19. ©2014 Wealthfront Inc.
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The results shown here are hypothetical from a
volatile year (2011) and are not based on actual
trading or client accounts.
!
Past performance is no guarantee of future results
and any historical returns, expected returns, or
projections may not reflect actual future
performances. All securities involve risk and may
result in some loss. We incorporated trading costs
($8/trade, bid-ask spreads, and incremental
expense ratios for the alternate ETFs used in tax-
loss harvesting.
$100,000 INVESTMENT
MIX
HARVESTABLE TAX
LOSSES
-5.0% -10.0% -15.0% -20.0% -25.0%0.0%
TAX-LOSS HARVESTING
VALUE
1 2 3
SOURCE Google Finance | *Consult your tax advisor to determine whether tax-loss harvesting is right for you.
Improve Your
After-Tax Returns
TAX-LOSS HARVESTING*
20. ©2014 Wealthfront Inc.
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Recap
*Consult your tax advisor to determine whether tax-loss harvesting is right for you.
The results shown are hypothetical and not based on actual trading or client
accounts. Past performance is no guarantee of future results and any historical
returns, expected returns, or projections may not reflect actual future
performances. All securities involve risk and may result in some loss. See
disclosures for more details.
Investing Well
• Diversify broadly across and within
asset classes!
!
• Use low cost ETFs or index funds!
!
• Determine your tolerance for risk
• Rebalance as needed over time!
!
• Be thoughtful about taxes
INVESTING WELL BENEFIT
Low-Cost ETFs (vs. Mutual Funds) 2.1%
Optimized Tax-Aware Allocations 1.1%
Threshold Rebalancing (vs. No Rebalancing) 0.4%
Tax-Loss Harvesting* 1.0%
Total Annual Benefit 4.6%
21. ©2014 Wealthfront Inc.
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More Reading
A Random Walk Down Wall Street
Burton Malkiel!
!
!
!
The Elements of Investing
Burton Malkiel & Charles Ellis!
!
!
!
Unconventional Success
David Swensen!
!
!
!
What Investors Really Want
Meir Statman!
!
!
!
Winning the Loser’s Game
Charles Ellis!
Burton Malkiel is Wealthfront’s Chief Investment Officer and Charles Ellis & Meir Statman are Wealthfront advisors.
22. ©2014 Wealthfront Inc.
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Disclosures
Nothing in this presentation should be construed as a solicitation or
offer, or recommendation, to buy or sell any security. Financial
advisory services are only provided to investors who become
Wealthfront clients pursuant to a written agreement, which investors
are urged to read and carefully consider in determining whether such
agreement is suitable for their individual facts and circumstances.
Past performance is no guarantee of future results, and any
hypothetical returns, expected returns, or probability projections may
not reflect actual future performance. Investors should review
Wealthfront’s website for additional information about advisory
services.
ASSET CLASS RETURNS
Wealthfront used the following for its calculations: US Bonds
(Barclays Capital US Aggregate Bond Index), Foreign Stocks (MSCI
EAFE Total Return Index), Emerging Markets (MSCI Emerging
Markets Total Return Index), Real Estate (NAREIT North America
Index), Natural Resources (DJ-UBS Commodity Index Total Return
Index). Wealthfront presents the information going back to 1987,
which is the earliest date that necessary data is available for all six of
the asset classes being used.
TAX-LOSS HARVESTING
The tax-loss harvesting analysis on slide 19 presents hypothetical
results for tax-loss harvesting in a volatile year like 2011. The
example assumes $100,000 investment on January 1st, 2011 and the
opportunity to harvest losses on December 15, 2011. Past
performance is no guarantee of future results, and any hypothetical
returns, expected returns, or probability projections may not reflect
actual future performance. Consult your tax advisor to determine
whether tax-loss harvesting is right for you.
Disclosures
ESTIMATED BENEFITS
The performance checklist on slide 20 compares the estimated time-
weighted returns of a Wealthfront investment with the returns
experienced by an average 20-year US Mutual Fund investor as
described by DALBAR.
The amounts are obtained by adding the projected additional rates of
return from various Wealthfront investment features (as described
here) to the average US Mutual Fund investor return from DALBAR
(3.17%/year) and compounding the result on an annual basis over 20
years. It is intended to highlight the possible differences in earnings if
you use Wealthfront’s investment approach rather than the approach
applied by the typical US Mutual Fund investor and where your
earnings are reinvested over a 20-year period.
It is not intended to predict portfolio earnings or performance, nor is it
a guarantee of future performance or earnings. Actual investors on
Wealthfront may experience different results from the results shown.
The performance checklist does not represent the results of actual
trading using client assets. See Full Disclosure at wealthfront.com.
LOW-COST ETFS VS. MUTUAL FUNDS
Arnott, Robert D., Andrew Berkin, and Jia Ye. 2000. “How Well Have
Taxable Investors Been Served in the 1980s and 1990s?”
OPTIMIZED TAX-AWARE ALLOCATION
Wealthfront performed simulations that measured the difference in
average annual return attributable to owning a taxable portfolio
consisting of seven asset classes to a portfolio consisting of three
asset classes assuming the same risk tolerance for the two portfolios
for the period 1987-2010.
The three-asset-class portfolio consisted of US Stocks, US Bonds
and International Stocks. Wealthfront’s seven-asset-class portfolio
included US Stocks, Foreign Developed Stocks, Emerging Market
Stocks, Dividend Growth Stocks, Municipal Bonds, TIPS and Natural
Resources. Annual rebalancing was assumed. While the data used for
this comparison and the optimal allocation comparison are from
sources that Wealthfront believes are reliable, these comparisons
represent Wealthfront’s opinion only.
AUTOMATIC REBALANCING
Swensen, David, Unconventional Success, 2005, pp. 195-96.
TAX-LOSS HARVESTING
We simulated the potential after-tax benefit of our tax-loss harvesting
and found that it added an average of at least 1.13% annually, net of
commissions. The results are hypothetical only and should not be
relied upon for predicting future performance. See our tax-loss
harvesting white paper for more details. Wealthfront’s tax-loss
harvesting strategy is available only to portfolios with $100,000 in a
taxable account.
23. Questions
Get $15,000 Managed For Free – http://wlth.fr/jeffr
Jeff Rosenberger, PhD @ R o s e n b e r g e r J e ff
w e a l t h f r o n t . c o m