Infinity Financial is a busy team of certified financial planners based in Cork City. We have 35+ years of experience in helping people just you to secure your financial future. We work with clients just like you to devise a plan to fill in any gaps or shortfalls to help you achieve your goals. We help our clients with 5 primary goals:
1. Establishing and achieving what you want.
2. Identifying and maintaining your desired lifestyle.
3. Analysis and assessment of your current financial positions.
4. Having the confidence and clarity to decide which direction your future should be going.
5. Making more time, more choices, more freedom, and hence being able to focus on the more exciting things in life.
You can reach us at https://infinityfinancial.ie/ or reach out to us directly at info@infinityfinancial.ie
Good Stuff Happens in 1:1 Meetings: Why you need them and how to do them well
Investment presentation for beginners - Infinity Financial Planning
1.
2. Diversification neither ensures a profit nor guarantees against loss in a declining market.
Investment Solutions
Focus on What You Can Control
No one can reliably forecast
the market’s direction or predict
which stock or investment
manager will outperform.
A good financial adviser can help
you create a plan and focus
on actions that add value.
Creating an
investment plan to fit
your needs and risk tolerance
Structuring a portfolio around
historical data
Reducing expenses and turnover
Diversifying broadly
Minimising taxes
3. Important investment concepts: Compounding
Compounding is critical, but it takes a long time
Assumptions
Each investor contributes €2k annually over 25
years.
Investor A earns 4% annually on cash deposits.
Investor B generates the long-term average annual
return from equity markets of 9% (8% after costs).
Impact of taxes ignored for the sake of simplicity.
4. Investing NOT Speculating
Speculating leads to poor returns
Speculating
Short-term bets
Active buying & selling
Market timing
Options trading
Charting/technical analysis
CFD accounts
Spread-betting
Investing
Follow a consistent investment strategy
Stick to your investment strategy during
market downturns
Invest regularly if saving for the long-term
Avoid market ‘noise’
5. Investing vs Speculating
Seek to invest, rather than speculate
In the short-term the market can be like
A casino, betting, confusing, volatile
And it fulfils the gambling instinct in human nature
Decisions can be driven by emotion.
But in the medium & long-term
The markets reflect economic and business progress, which
builds wealth
Economies grow, businesses therein grow – more profits, more
cash flows
Rising profits & cash flows underpin rising dividends & hence
rising share prices
7. Long-term Real Asset Returns
Real returns are the investment returns after inflation
Equities, Commercial Property the best
Bank deposits: 1% per annum above inflation (past 100 years)
Fixed interest rate instruments
Long-dated government bonds: 1.5-2.0% per annum
Investment grade corporate bonds: 2.0-3.0% per annum
Non-investment grade corporate bonds: 4.0-5.0% per annum
Commodities have just about matched inflation longer-term
Gold has averaged just over 1% above inflation longer-term
Hedge & Absolute return strategies/funds have beaten inflation, but have
done much worse than equities.
8. 8
Picking the right assets to invest in can determine long-term investment returns
Why we think asset allocation is important
• The most important decision investors make is the mix of assets they
select (asset allocation), not the individual investments they purchase.
Asset mix should be based on an investor's financial objectives, risk
tolerance, and time horizon (which is often influenced by an investor's
age).
• Research shows how a portfolio is allocated among asset classes is
the most significant determinant of long-term returns.*
• In choosing an asset mix, investors should balance their need for asset
growth against their willingness to accept the negative returns that a
given mix could produce in some years.
• Understanding the volatility of past returns associated with a given
asset mix will help investors gauge their risk tolerance. Investors
shouldn't expect future long-term returns to differ significantly from the
markets' long-term historical averages.
*Source: Vanguard Investment Counseling and Research ("A primer on tactical asset
allocation strategy evaluation" 2010).
10. Diversification neither assures a profit nor guarantees against loss in a declining market. Past performance is no guarantee of future results.
The “All stocks” portfolio consists of all eligible stocks in all eligible Developed and Emerging Markets. The portfolio for January to December of year t includes stocks whose free float market capitalisation as of December t-1 is greater than $10mln in developed markets and $50mln in emerging markets and with non-
missing price returns for December of year t-1. Annual portfolio returns are value-weighted averages of the annual returns on the included securities. The portfolios “Excluding the top 10%” and “Excluding the top 25%” are constructed similarly. Individual security data are obtained from Bloomberg, London Share Price
Database, and Centre for Research in Finance. The eligible countries are: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Republic of Korea, Malaysia,
Mexico, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, and the United States.
Diversification May Prevent You from Missing Opportunity
Attempting to identify that
group of future winners is
a guessing game.
Diversification improves
the odds of holding the
best performers.
8.0%
3.6%
-4.4%
All stocks
Excluding the
top 10%
of performers
each year
Excluding the
top 25%
of performers
each year
10
Compound average annual returns: 1994–2017
11. 11
How you behave during market downturns is important
Dealing with Volatility
Peak-to-Trough Days Max Drawdown
November 1919 - September 1921 455 -46.2%
October 1929 - July 1932 679 -86.3%
March 1937 - March 1938 272 -49.0%
November 1938 - April 1942 871 -41.2%
May 1946 - June 1949 767 -24.0%
December 1961 - July 1962 135 -27.1%
February 1966 - October 1966 168 -25.2%
December 1968 - May 1970 373 -35.9%
January 1973 - December 1974 483 -45.1%
September 1976 - February 1978 368 -26.9%
April 1981 - August 1982 328 -24.1%
August 1987 - October 1987 38 -36.1%
July 1990 - October 1990 61 -21.2%
January 2000 - October 2002 685 -37.8%
October 2007 - March 2009 355 -53.8%
October 2018 - Dec 24th 2018 55 -16.3%
Average 403 -38.7%
Median 368 -36.1%
Source: Bloomberg, returns in USD (local currency).
"Bear Market" is typically defined as a decline of 20% or more.
S+P 500 "Bear Market" Declines
Temporary Declines are common
Type of Decline Average Frequency Average Length Last Occurrence
-5% or more About 3 times a year 46 days Jun-16
-10% or more About once a year 117 days Feb-16
-15% or more About once every 3 years 275 days Dec-18
-20% or more About once every 6 years 425 days Mar-09
Source: Capital Research and Management Co
A History of Declines - S+P 500 (1948-December 2018)
13. Disclaimer
Any advice or recommendation rendered by us to you or the results of any research carried out on your behalf is provided solely for the purpose of this investment review and for your benefit. We do not
accept any liability whatsoever for any direct or consequential loss arising from any use of material contained in this report. All estimates and opinions included in this report constitute our judgements as
of the date of this report. By accepting this report you agree to be bound by the limitations set out herein and will not rely on it in making any investment decision with respect to any securities that may
be referenced in the report. This report is confidential, is for information purposes only and is intended solely for the recipient to whom it is delivered. It may not be reproduced, photocopied or
disseminated to any other person without express prior written consent This document does not constitute or form part of an offer to sell or subscribe, or the solicitation of an offer or invitation to purchase
or subscribe, any security or instrument or to participate in any trading strategy. Past performance is not a predictor of future performance. The financial illustrations and illustrative returns and cash flows
contained in this report do not constitute forecasts and should not be construed as such. The financial illustrations may not reflect current or future market expectations and the assumptions on which
they are based are subject to many uncertainties. Some or all of these assumptions may turn out to be different from the actual position and the financial illustrations should not be relied upon as a guide
to future financial performance but only as examples of possible outcomes. The information in this report is not intended to provide, and should not be relied upon for, accounting, inheritance, pension,
legal or tax advice. Each recipient should consult its tax, legal and accounting or other advisers about the issues discussed herein and each recipient shall be solely responsible for evaluating the risks
and merits involved in the investments which are the subject of this report. The information contained in this report is not intended to be complete and is subject to change and does not constitute all the
information necessary to adequately evaluate the consequences of investing in securities or any other investments.