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bjbj Hello everyone and welcome to another episode of EricksonTV. Curtis here with Lauren.
Once in a while I get this creative inspiration to be an artist, so I made these charts. But
this is actually really meaningful because it has to do with one of the foundations of
Erickson Wealth & Tax Management: to help clients grow their income. Now this chart
I want to credit to an article by Nick Murray that featured Mike Meehan, who put this together.
This is an illustration of 2 things. We re looking at a timeframe from 2005 2012. So
this is very recent history. We re looking at what has happened to bond interest income.
As you can see, over those 7 years, it has gone progressively down. The red line is investors
adding new money into bond funds. And that has progressively gone up. So what do you
think about that? As a general rule, this is what s been happening. As investors get lower expected returns in
bonds, they put more and more money in. As I said we really want to help clients grow
their income and this is going in the wrong direction. Now this next chart we are looking
at is a stock index measured by the S&P 500 Equity Index. This is not the only stock index
by the way. This chart has the same timeframe, from 2005 2012. As you can see, dividends
have, generally, been progressively going up. But look at what the investors are doing:
taking their money out. My takeaway is that this is another example of investors exhibiting
the wrong behavior. It s also almost a guaranteed losing proposition comparing the interest
with investors fleeing the stock market. If investors were being mostly rational, these
lines wouldn t be going up and down much. They should be going up just a little bit
over time because just a little more money should be being put into investment accounts
instead of being taken out of accounts. There should not be dramatic drops and dramatic
rises for different asset classes. People should be keeping a fairly similar mix at
any given time. Here are the charts with the inflation line: The final takeaway is that
when you want to look at investing for the long term and for retirement income, it seems
very clear to us that having all of your investments in bonds is not a good idea. Also, having
part of your investments in stock indexes such as the S&P 500 (and by the way there
are other indexes that have an even higher dividend yield) makes prudent sense. Thank
you for watching this episode of EricksonTV. If you would like to evaluate your portfolio
to make sure you are maximizing your retirement income growth, please give myself or Lauren
a call. Thank you very much. Bye now. taQa h^Rw h^Rw h^Rw h^Rw h1rP Hello everyone and
welcome to another episode of EricksonTV Curtis Erickson Normal Curtis Erickson Microsoft
Word 10.0 Erickson Wealth & Tax Management Hello everyone and welcome to another episode
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