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www.moneyconcepts.com

DecisionTime Starts With

PLANNING

DAN PYLE FINANCIAL

Money Concepts

DAN PYLE FINANCIAL

Money Concepts


2

Planning For An Enriched Retirement

1. Lifestyle 2. Financial Planning / Wealth Management 3. Insurance Needs4. Legal Affairs

5. Estate Issues


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Self-Assessment

• Retirement Satisfaction Exercise

• What Do I Need To Make Me Feel Happy And Satisfied?

• What Do I Want My Life To Be Like?

• What Personal And Financial Resources Do I Have?

Lifestyle


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What Is Your Vision For Retirement?

Lifestyle

• Homebodies

• Snowbirds

• Globetrotters

• Part-Timers“What Do I Want To Do With The Rest Of My Life?”


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In A Recent Survey Conducted By Guardian Life Insurance, 80% Of Baby Boomers Expressed Concern About Having Adequate Retirement Income. Approximately Half Of Boomers, Meanwhile, Were Uncertain About How Much Money They Need To Retire.1

A Principal Financial Survey Found That Two-thirds Of Workers Older Than 55 Expect That Their Standard Of Living Will Decline Once They Enter Retirement.1

1 Retirement Services Roundtable, “The Next Generation: Strengthening Relationships with the Upcoming Generations of Retirees,” 2005

Decision Time


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72% 28%

Agree Disagree

Americans Recognize The Need For Change…

Financial Risks Are Different In The Retirement Red Zone, Requiring ChangesTo Financial And Investment Strategies

… But May Not Understand Why Or How

How Critical Is It To Minimize Investment Losses In The Retirement Red Zone?

Very NotSomewhat

23% 30%47%

What Is The Greater Investment Risk In The Retirement Red Zone?

Too Aggressive:Upside potential,

risk of loss

Too Conservative:Protect against

losses, weak upside

potential50% 50%

Source: February, 2006 Retirement Red Zone Research Study Conducted by Prudential Financial

Decision Time


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The Pitfalls You Must Avoid1. Outliving Your Assets

2. Understanding The Effects Of Inflation And Taxes

3. Not Knowing The Difference Between Compound Growth And Simple Interest

4. Taking Too Much Or To Little Risk

5. Lack Of Diversification And Asset Allocation

6. Reacting To Short Term Results In A Long Term Strategy

7. Failing To Plan For The UnexpectedLifestyle


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62% 62% Have Annual Have Annual Incomes Under $25,000Incomes Under $25,000

9%9% Have Annual Have Annual Incomes Over $70,000Incomes Over $70,000

12% 12% Have Annual Have Annual Incomes Between Incomes Between

$40,000 and $70,000$40,000 and $70,000

17% 17% Have Annual Have Annual Incomes Between Incomes Between

$25,000 and $40,000$25,000 and $40,000

Retirement Statistics

Source: Social Security Administration, The Office of Policy, Income of the Population 55 or older 2002, table 3.1; released May 2004.

62%17%

12%

9%


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Sources of Baby Boomers’ Retirement Income:

Beliefs vs. Reality

Belief Reality

Company Pensions 45% 20%

Social Security 26% 18%

Private Savings 22% 33%

Other 4% 2%

Work Earnings 3% 27%

Source: U.S. Department of Health and Human Services.

Source of Income


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1980

1000

1981 897

1982 850

1983 823

1984 788

1985 759

1986 745

1987 718

1988 689

1989 655

1990 620

1991 594

1992 576

1993 559

1994 545

1995 529

1996 513

1997 502

1998 494

1999 483

2000 466

2001 453

2002 445

2003 434

2004 422

2005 406

25 Year Average Inflation Rate

3.15%


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Common Stocks

ReturnsOne-YearHolding Period

1926-2007

-60

-40

-20

0

20

40

60

'26 '01

’26 ’65 ‘06

Source: Ibbotson & Associates And Morning Star


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Reacting To Short Term Results In A Long Term Strategy

The Stock Market Fluctuates Dramatically

Over The Long Term The Results Are Positive

Time Is Your Ally When You Invest; While The Stock Market Has A 28.8% Chance Of Going Down In Any One Year, The Chance Of Losing Money Over 15 Years is 0*

*Past Performance Does Not Guarantee Future Results


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Investments vs. Investor Performance1984 - 2002

12.2%10.8%

3.1% 2.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

S&P 500 Small Mid CapIndex

Inflation CPI-U Average EquityFund Investor

During The Biggest Bull Market In History, Equity Mutual Fund Investors Significantly Lagged The Market. Why?Why?

Source: Dalbar, Inc. Quantitative Analysis of Investor Behavior – 2003. Represents average annually compounded returns of equity indices vs. equity mutual fund investors; based on the length of time shareholders actually remain invested in a fund and the historic performance of the fund’s appropriate index. Returns are from the time period January 1984 to December 2002. Past performance if no guarantee of future results. Investors cannot invest directly in an index.


14Source: Gavin Quill. November 2001. “Investors Behaving Badly” Journal of Financial Planning. 2001 Data Period: 1990 – 1999. Flows calculated by Morningstar category

Mutual Fund – Performance Chasing

$91

$6

$-

$10$20

$30

$40$50

$60

$70

$80$90

$100

After Best Quarter After Worst Quarter

Net Flows Into All Mutual Funds


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Don’t Allow Emotions To Dictate Decisions

Riding The Emotional Wave Of Investing

ConfidentTime To Invest

EuphoricInvest Everything Aggressively

DefeatedSell Everything

Confident

HopefulMaybe Things Are Turning Around (I’ll Wait And See)

NervousWhat’s Going On

The Very Ease Of Moving Investments From One To The Other Carries With It The Risk

Of Being Emotionally Whipsawed Into Selling At The Bottom And Buying At The Top


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Common Stocks Returns

Twenty-YearHolding Periods

1926-2007

Risk ReducesOver Time

Source: Ibbotson & Associates And Thomson Financial

Investors Need To Overcome Short-Term Volatility To Obtain Long-Term Results!

1926 1930 1940 1950 1960 1970 1984 20060

2

4

6

8

10

12

14

16

18

20


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Lack Of Diversification And Asset Allocation

100

10

1

# of # of StocksStocks

Risk Ratio

AdvantagesAdvantages

Mutual FundMutual Fund

124

1050

100

6.63.8 2.41.61.11.0

Diversification# Of Stocks Risk Ratio


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MXXIX16.36%

MOPAX20.00%

PZFVX14.64%

SSAIX29.00%

TSVOX20.00%

MXXIX

MOPAX

PZFVX

SSAIX

TSVOX

Asset AllocationThree Major Benefits To An Investor

1. It Provides Management Discipline.

2. It Emphasizes The Development Of An Asset Allocation Policy.

3. When Followed Over Several Market Cycles, It May Deliver A Higher Return For The Risk Taken.


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Efficient Frontier

Risk% – Standard Deviation

Re

turn

– %

Low Risk Low Return

Medium Risk Medium Return

High Risk High Return

A Portfolio Above This Curve Is Impossible

Optimal Portfolios Should Lie On This Curve Which Is The Efficient Frontier.

Portfolio’s That Lie Below The Curve Are Not Efficient, Because For The Same Risk One Could Achieve A Greater Return.


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0%

10%

20%

30%

40%50%

60%

70%

80%

90%

1985 1999

Fixed Income Equities

Asset AllocationWithout RebalancingWithout Rebalancing

Without Periodic Rebalancing Your Asset Allocation Can Drift Substantially From Your

Targets Peak Equity Exposures Occur At Peaks In the Equity

Market, Increasing Your RiskData is from December 1985 to December 1999. Fixed Income is represented by the Lehman Brothers Aggregate Index. Equities are represented by the S&P 500 Index. The Starting portfolio of 50% fixed income and 50% equities is not rebalanced for the entire period shown.

50% 50%

77%

23%

Fixed IncomeEquities

1985 1999


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11.49% 11.46%8.24%

10.34%

-12.60%

-27.30%-30.00%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

Return Standard Deviation Worst Loss

Rebalanced

Not Rebalanced

Data is from January 1981 – March 2005. Portfolios consist of 12% International Stocks (MSCI EAFE), 10% small-mid capitalization stocks (Russell 2500), 28% Large-cap stocks (SP500) and 50% (Lehman Brothers Aggregate), Rebalanced portfolio is rebalanced quarterly. Source: MPI Style, LFA

Rebalancing Helps Reduce Risk1981 - 2005


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If An Investment Product Offered:Guarantee Against Principal Loss, And/OrGuarantee Minimum Annual Return With Further Upside

Potential…

… How Would It Affect Your Investment Behaviors?

Source: February, 2006 Retirement Red Zone Research Study Conducted by Prudential Financial.All guarantees are based on the claims-paying ability of the issuing insurance company.

74%74%

72%72%

63%63%

• Stay In Stock Market Even If Short-Term Losses

• Choose More Aggressive Investments With Greater

Potential For Returns• Invest For Longer-Term

Horizon

Guarantees Help People Think Differentlyabout Risk


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Early Market Decline Late Market Decline

Annual Return Account Balance Annual Return Account Balance

Starting account value $250,000 $250,000

Age 62 -17.6% $193,500 16.6% $279,000

Age 63 -12.8% $155,857 7.4% $286,771

Age 64 -3.5% $137,141 12.0% $307,922

Age 69 7.1% $108,440 11.3% $394,055

Age 70 16.9% $110,932 14.9% $416,444

Age 77 -3.2% $34,841 -3.2% $605,061

Age 79 14.9% $0 16.9% $690,067

Age 88 11.3% $0 7.1% $1,132,926

Age 89 12.0% $0 -3.5% $1,065,507

Age 90 7.4% $0 -12.8% $900,523

Age 91 16.6% $0 -17.6% $712,574

Average annual rate of return for 30-year period 7.0% 7.0%

The Effect of Market Returns on Portfolio Balances

Hypothetical Example*(5% Withdrawals Begin At Age 62)

Source: February, 2006 Retirement Red Zone Research Study Conducted by Prudential Financial.* This example does not represent the performance of any particular investment.

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Money Concepts International. Inc.11440 N. Jog Road

Palm Beach Gardens, FL 33418

Tel:. 561.472.2000


All Securities Through Money Concepts Capital Corp. Member FINRA/SIPCMoney Concepts Advisory Service Is A Registered Investment Advisor With The SEC

All Non Securities And Non Advisory Products Through Money Concepts International, Inc.

Providers of Financial Services Since 1979

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