SELF ASSESSMENT
Think Like an Endowment
While many investors (and their advisors) still think about investment portfolios in terms of cash, stocks, and bonds, a growing number of investors and advisors have expanded their investment universe to include non-traditional investments, often called “alternatives”. The primary benefit of using non-traditional investments in a portfolio is to augment the risk-adjusted returns provided by a common stock-bond portfolio. This strategy is commonly referred to as taking an “endowment approach” because the endowments of large universities were early adopters of non-traditional investments.
As an example, as of June 30, 2015, Harvard University’s Endowment was valued at $37.6 billion, making it the single largest university endowment. Below outlines Harvard’s asset allocation shifts over the years[1]:
As can be seen in the table above, the percentage allocation to non-traditional investments increased from 25% in 1995 to almost 57% by 2014.
Harvard University Endowment’s annualized performance over the last 10- and 20-year periods ending June 30, 2015 was 7.6% and 11.8%, respectively, as compared to a standard 60% stock / 40% bond portfolio (using the S&P 500 Index and the Barclays Aggregate Bond Index), which provided 6.8% and 7.9% average annualized returns over those same time periods[2].
[1] Source: Harvard Management Company Annual Report 2015.
[2] Source: Harvard 2014 Annual Report.
Atomi’s 2-Minute Self Assessment
We know you have a lot going on in your life. Perhaps we can help. Please review the concerns outlined below. Make note of the ones that best relate to you. This may help you decide what issues to address in your meeting with your Atomi Personal Strategist:
Retirement
☐ Will my money last through retirement?
☐ Do I need long-term care insurance?
☐ What are my retirement investment options?
☐ What should I do with my employer retirement plan?
☐ What should I be doing now to prepare me for retirement?
Education Planning
☐ How much should I save for college? When should I start planning?
☐ Will I qualify for financial aid? Where do I start?
☐ What are my college savings options?
Life Events
☐ What happens to my 401(k) when I change jobs?
☐ What are my options if I am laid off?
☐ I am getting divorced. What happens to my assets?
☐ What do I do when a loved one dies?
Eldercare
☐ How does Medicare work?
☐ What should I look for in a nursing home?
☐ How do I cope with Alzheimer’s disease?
☐ What happens if I must care for my parents?
☐ How involved should I be in my parent’s finances?
☐ Should I know how to find all my parents important documents and passwords?
Estate Planning
☐ How do I protect my family against probate?
☐ How do I protect my estate from taxes?
☐ How do I protect inheritance from creditors?
☐ How do I create a legacy for my children?
☐ Can I provide for my favorite charity when I am gone?
☐ What will my survivors need to know?
Financial Basics
☐ How do I keep my records safe and organized?
☐ How can I do a better job budgeting? How do I reduce my debt?
☐ How do I teach little kids about money? How do I help a young adult establish a financial strategy?
☐ How do I have a financial discussion with family?