Why do I need help?
Study after study shows that investing on emotion or without a fact based system can be hazardous to your wealth. For example, research firm Dalbar found that investors on their own underperformed the market over a 30 year period by 6.69%! (1) This gap in market performance versus investor performance is driven by emotions. Most investors do not have a system to rely upon, so they make decisions base upon their emotions with devastating effects.
What is an investor to do? At Live Oak Wealth Management, we utilize fact based investing to overcome emotions, analyst guesses and outdated static asset allocations that says you must have your money diversified to different asset classes that never changes.
Participants using Help do significantly better than those who go it alone.
Between January 1, 2006 and December 31, 2017, an analysis was conducted in 14 401K plans representing over 723,000 participants with over $55 billion in plan assets. Key findings from the analysis concluded that across all age ranges and a wide range of market conditions, participants using Help earned higher median annual returns than those not using Help.
In addition, the annual performance gap between Help Participants’ and Non-Help Participants’ median returns was 3.32%, net of fees over the period 2006–2012.2 This difference can have a meaningful impact on wealth accumulation over time. For a 45-year old Help Participant it could translate to 79% more wealth at age 65.3 (2)
Chart Source: Dalbar Inc. Indices used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Bloomberg Barclays U.S. Aggregate Index, Homes: median sale price of existing single-family homes, Gold: USD/troy oz., Inflation: CPI. 60/40: A balanced portfolio with 60% invested in S&P 500 Index and 40% invested in high-quality U.S. fixed income, represented by the Bloomberg Barclays U.S. Aggregate Index. The portfolio is rebalanced annually. Average asset allocation investor return is based on an analysis by Dalbar Inc., which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable) and represent the 20-year period ending 12/31/17 to match Dalbar’s most recent analysis.