1. Investing Craig L. Israelsen, Ph. D
Investing Craig L. Israelsen, Ph.D. Utah Valley University slides until total happiness

2. Philosophy Diversification Time Fuel Perspective
Multiple asset classes needed – more than just stocks and bonds
Time
The value of investing & diversification is manifested over longer-time frames
Fuel
A diversified portfolio has to be given money (and time) to grow!
Perspective
Investing should not be life consuming. Develop rewarding hobbies, such as…

3. Successful investors…
Behavior
Successful investors…
Contribute (save/invest) 10-15% of their income (FUEL)
Rebalance their portfolios on a regular basis
Understand that different asset classes take turns
Have reasonable expectations and “benchmarks”
Measure results in YEARS, not weeks or months

4. It’s 1970 and you’re 25 years old…

5. It’s 1970 and you’re 25 years old…
For 45 years you invested money into…
Bucket in your room
$35,000 starting salary, 3% annual increase

6. It’s 1970 and you’re 25 years old…
For 45 years you invested money into…
Account Balance at age 70 in 2014 (you saved 10% of your income each year)
Bucket in your room
$325,000
$35,000 starting salary, 3% annual increase

7. It’s 1970 and you’re 25 years old…
For 45 years you invested money into…
Account Balance at age 70 in 2014 (you saved 10% of your income each year)
Value after inflation…
Bucket in your room
$325,000
$213,000
$35,000 starting salary, 3% annual increase

8. It’s 1970 and you’re 25 years old…
For 45 years you invested money into…
Account Balance at age 70 in 2014 (you saved 10% of your income each year)
Value after inflation…
Bucket in your room
$325,000
$213,000
Savings account (“Cash”)
$759,000
$359,000
$35,000 starting salary, 3% annual increase

9. It’s 1970 and you’re 25 years old…
For 45 years you invested money into…
Account Balance at age 70 in 2014 (you saved 10% of your income each year)
Value after inflation…
Bucket in your room
$325,000
$213,000
Savings account (“Cash”)
$759,000
$359,000
Diversified Portfolio of Stock, Bonds, Cash, Real Estate, Commodities
$3,460,000
$1,167,000
$35,000 starting salary, 3% annual increase

10. What is diversification?

11. Minimal Diversification The S&P 500 Index

12. Two-Asset Diversification 60% Stock/40% Bond Portfolio

13. Superior Diversification 12-Asset Portfolio

14. 7Twelve®

15. Performance

16. 15-Year Growth of $10,

17. Growth of $10,000
US Large Cap Stock

18. By Design

19. Eight Equity and Diversifying Holdings
7Twelve®
Eight Equity and Diversifying Holdings
 8 “Growth Engines”
US Stock Non-US Stock Real Estate Resources US Bonds Non-US Bonds Cash

20. Four Fixed Income Holdings
7Twelve®
Four Fixed Income Holdings
 4 “Safety Brakes”
US Stock Non-US Stock Real Estate Resources US Bonds Non-US Bonds Cash

21. 7Twelve® A Multi-Asset Balanced Strategy
8 “ENGINE” MUTUAL FUNDS
 65% of Overall Portfolio Allocation
4 “BRAKE” MUTUAL FUNDS
 35% of Overall Portfolio Allocation
US Stock Non-US Stock Real Estate Resources US Bonds Non-US Bonds Cash

22. Brakes Have Outperformed 1/3 of the time
Year
7Twelve Brakes
(4 ETFs)
7Twelve Engines
(8 ETFs)
2000
6.86
6.72
2001
3.93
-4.46
2002
12.36
-7.35
2003
7.67
36.80
2004
6.29
23.50
2005
-0.34
18.42
2006
4.01
20.72
2007
8.58
12.67
2008
3.73
-38.79
2009
4.65
35.03
2010
4.06
19.72
2011
6.30
-4.66
2012
4.05
14.25
2013
-3.53
16.08
2014
-0.65
2.40
3-Year Return
-0.09
10.74
5-Year Return
1.98
9.16
10-Year Return
3.03
7.51
15-Year Return
4.46
8.27

23. Brakes Have Outperformed 1/3 of the time
Engines Have Outperformed 2/3 of the time
Year
7Twelve Brakes
(4 ETFs)
7Twelve Engines
(8 ETFs)
2000
6.86
6.72
2001
3.93
-4.46
2002
12.36
-7.35
2003
7.67
36.80
2004
6.29
23.50
2005
-0.34
18.42
2006
4.01
20.72
2007
8.58
12.67
2008
3.73
-38.79
2009
4.65
35.03
2010
4.06
19.72
2011
6.30
-4.66
2012
4.05
14.25
2013
-3.53
16.08
2014
-0.65
2.40
3-Year Return
-0.09
10.74
5-Year Return
1.98
9.16
10-Year Return
3.03
7.51
15-Year Return
4.46
8.27

24. Brakes behaved very differently than Engines in 2008
Year
7Twelve Brakes
(4 ETFs)
7Twelve Engines
(8 ETFs)
2000
6.86
6.72
2001
3.93
-4.46
2002
12.36
-7.35
2003
7.67
36.80
2004
6.29
23.50
2005
-0.34
18.42
2006
4.01
20.72
2007
8.58
12.67
2008
3.73
-38.79
2009
4.65
35.03
2010
4.06
19.72
2011
6.30
-4.66
2012
4.05
14.25
2013
-3.53
16.08
2014
-0.65
2.40
3-Year Return
-0.09
10.74
5-Year Return
1.98
9.16
10-Year Return
3.03
7.51
15-Year Return
4.46
8.27

25. Portfolios are like salsa

26. Salsa recipe

27. 7Twelve® Equally-weighted exposure to 12 asset classes

28. How?

29. Where do we find the ingredients to build a diversified portfolio?
Vanguard mutual funds
T. Rowe Price mutual funds
Fidelity mutual funds
Schwab mutual funds
Motif Investing (pre-built portfolios)
Homestead Funds ($1 minimum to open their mutual funds if investing automatically)

30. Questions? www.7TwelvePortfolio.com

31. This is a copyrighted document, copying for redistribution is
This document is a research report presenting portfolio research and analysis.
This document is neither investment advice nor an investment solicitation.
Implementation of the 7Twelve® portfolio is no guarantee of performance.
This is a copyrighted document, copying for redistribution is
prohibited unless written permission is
obtained from Craig L. Israelsen
7Twelve® is a registered trademark belonging to Craig L. Israelsen
Copyright © Craig L. Israelsen
All rights reserved