Financial Abundance, LLC, a Registered Investment Adviser, offers low cost Asset Management services based on the investment approach described in Chapter seven of Financial Abundance Guide.
Studies have shown that as much as 90% of your total investment return can come from asset allocation. In making asset allocation recommendations, Financial Abundance considers your age, your risk tolerance level and the current market conditions. Our asset allocation approach encompasses your total investment portfolio, including 401(k)s, rental properties, investment partnerships etc. We also examine and make recommendations on which assets should be held in taxable, tax deferred or tax free accounts.
For the equity portion of the assets under management, we use our Model ETF Portfolio. This portfolio consists of Exchange Traded Funds, which are similar to indexed mutual funds. In the six years that our portfolio has been in existence (2002-2007), it has out performed the S&P 500 by 41% with an annualized total return of 11.85% vs the S&P annualized total return of 5.57%.
Our ETF portfolio has a Mid Cap bias. Mid Caps are stocks which have market capitalizations of between $1 billion and $5 billion. From 1981 through 2006, Mid Caps annualized return was 4.2% greater than the Russell 2000 Small Cap Index and 2.9% greater than the S&P 500 Large Cap Index. Over 25 years, this increase gave Mid Caps a total return that was 90% greater than Large Caps and 170% greater than Small Caps.
For fixed assets we use bond mutual funds and money market funds. For taxable accounts, we often use municipal bond funds or, if the account is large enough, we will build a municipal bond ladder.
A major determinant of your total return is the amount of fees that you pay in both mutual fund and asset management expenses. Many asset management companies charge between 1% and 1.5% annually to put your money into mutual funds. Actively managed mutual funds have operating and marketing expenses of between 1% and 2.5% annually. With these asset managers, you are annually paying between 2% and 4% in total fees before you receive any investment return.
The Financial Abundance approach is to charge a maximum of .75% annually on accounts with a minimum of $200K under management. We use low cost ETFs that typically have a maximum total annual fee of .25%. With our approach, your maximum total investment fee is 1% annually. The less you pay in investment management fees, the more of your investment returns you receive.
For complete information on our Asset Management services, contact us via phone or email.
