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How would you invest $100,000 to ensure a minimum of 7% growth a year? What would your flat fee a year be to invest it?

May 24, 2017 by Sara in  |  Flag
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The only way to ensure a minimum 7% return is by investing in Investment Grade Bonds that are paying 7% in interest. Unfortunately, in today's low yield world, it is an anomaly. You have to be willing to accept credit risk to have a chance at earning the 7% return. You can look at higher yielding investments like Private BDCs, Private REITs, Private Peer to Peer Credit Funds, etc. and hold a diversified basket of these illiquid funds to have a fair shot at making north of 7% after all costs and fees.

Our Firm charges a flat 1% advisory fee to create a custom basked of Private Credit Strategies yielding north of 8% with some downside risk and volatility.

I will happy to provide more color over the phone (920) 785-6010.

Comment   |  Flag   |  May 24, 2017 from Appleton, WI

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Rich Winer Level 20

Sara, It's not unreasonable to expect a 7% average annual return from a diversified portfolio of stocks and bonds over a full market cycle; but there is no guarantee. Also, as Prateek implied, since we have not had a severe bear market since 2008, when the stock market dropped 40%. So, it's likely that the next bear market will come sooner rather than later. Because it could take months or years to rebound from a severe bear market, experiencing one in the next few year could dramatically impede your ability to get an average 7% annual return.

Depending on your financial circumstances, you may qualify to invest in certain alternative investments that have no correlation to the stock and bond market and no sensitivity to interest rates. We have some that make monthly payments and have provided average annual returns between 6 % and 11%, depending on the investment. I would need to know more about your financial circumstances before I could determine if these investments would be appropriate and meet your objectives. Feel free to call me at (818) 835-8755 or email me at rich.winer@spwm.com.

Comment   |  Flag   |  May 24, 2017 from Woodland Hills, CA

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Randy Brunson Level 18

Good question Sara,

A 7% return isn't unreasonable to expect, over an appropriate measuring period. I'm a bit concerned that you are looking to "ensure" this each year. As Prateek references above, a 7% return is possible, though there will be some risk involved.

Wishing you well, as you look for solutions.

Warm regards,

Randy Brunson

Comment   |  Flag   |  May 24, 2017 from Suwanee, GA

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Sara,

I would tend to agree with many of the comments already posted. A properly allocated and diversified portfolio can put you in a good position to earn annualized returns of 7% or more, however, there is risk involved and there would be no guarantee. In fact the only time you can use the word guarantee (my interpretation of “ensure”) is in relation to annuities. Even that guarantee is only as good as the insurance company backing it up, and they are not currently offering 7% or more. Depending on your financial situation and investment timeframe, a blend of traditional assets (stocks, bonds, etc.) and alternative assets/alternative strategies could provide a smoother ride than either asset class alone while also providing a good chance of reaching annualized returns of 7% or more over an extended period of time.

My fee to manage $100,000.00 would be 1.00% annually.

Please let me know if you have any additional question. 720-808-6979. sean.cooper@fitfinancialconsulting.com

Sean

Comment   |  Flag   |  May 25, 2017

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A.J. Blackstone Level 14

As long as you have "ensure" and "invest" in the same thought, you aren't ready to invest.

2 Comments   |  Flag   |  May 24, 2017 from Tampa, FL
Sara

If you haven't made at least 10% in the last 5 years. You shouldn't be an investor. To expect average returns of 7% is not unreasonable.

Flag |  May 24, 2017
Prateek Mehrotra, MBA, CFA®, CAIA®

Last 5 years is anomalous as it represents mostly a period of rising equity prices after the 2008 Financial Crash. Moreover, what one earned in the last five years does not necessarily reflect what they will earn in the next five years unless you make one directional concentrated bets. Given where we are with US Equity valuations, it is difficult to imagine that the markets could produce those kind of returns, unless Mr. Trump can implement all the reforms he has been touting.

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Flag |  May 24, 2017 near Appleton, WI

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Sara, unfortunately there are no guarantees in life or in the world of investing. In the current low interest rate environment and with the stock market having gone up so far so fast, a return of that size over the near and intermediate term will certainly involve some risk taking on your part. Further , I believe we are entering a period of uncertainty in the markets that will make a return like this difficult without a high degree of risk tolerance. I would begin to focus more on capital preservation at this time as the markets are due for some sort of correction in the near future. I would be happy to give you my thoughts on capital preservation strategies that can still provide a healthy return for you. You can contact me at 908 489-2847

Comment   |  Flag   |  Nov 20, 2017

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