1. Principles for Successful Long-Term Investing
Richard Jakotowicz CFA, CFP®
Director of the Financial Planning & Wealth Management Major
Purnell Hall, Room 318 |

2. Key Topics Know your tolerance for risk
Reap the benefits of compounding
Avoid emotional biases
Remain invested
Seek asset class diversification
Volatility matters
Utilize multiple strategies
PRIVATE & CONFIDENTIAL

3. How much Risk is right for You?
What is your emotional willingness towards risk?
What is your financial ability to take investment risk?
What is your threshold of sequence of return risk?
High Ability
Low Ability
Low
Willingness
High
Willingness
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4. The Power Of Compounding
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*Assumes a hypothetical 8% annual return which is for illustrative purposes only and not intended to represent the performance of any particular investment or investment style.

5. The Power Of Dividends Compounding
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6. Your Emotions Could Cost You Money
Intra-year Lows
vs Calendar Year Returns

7. The Cost Of Not Being Invested
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8. Profit needed to return to your original starting value
Gains And Losses Are Not Symmetric
Profit needed to return to
your original starting value
Losses in your Portfolio

9. Trying To “Time The Market” Hurts Your Return
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12. You Don’t Have A Crystal Ball. Invest in ALL types of assets.
Return Risk

13. Return is NOT the only variable
You need to consider how much RISK you take!
We Want To Maximize The Amount Of Return Per Unit Of Risk!

14. Investments That Behave The Same Do Not Lower Risk
How Do We Manage Risk?
Investments That Behave The Same Do Not Lower Risk

15. Investments That Behave The Opposite Eliminate Risk
How Do We Manage Risk?
Investments That Behave The Opposite Eliminate Risk

16. We Want Investments That Have No Relationship

17. Asset Allocation Reduces Volatility
Real Estate Returns in Blue
Asset Allocation Returns in Black
Utilizing return and volatility results on previous page

18. What Is Asset Allocation?

19. Active Reallocation Strategy
Hypothetical asset allocation.

20. Active vs Passive Mutual Funds
The S&P500 Index compared to the Vanguard S&P500 Index Fund
The S&P500 Index compared to an
Active Mutual Fund
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21. Active Mutual Funds Rarely Do Better Than The Index Fund
Excess Return = Did the stock do better or worse than the overall market
Distribution of lifetime excess returns
The return of the Market
2/3rds of the stock’s returns were less than or equal to the overall market
Number of stocks
2/3 of the companies can’t beat the Index. The 1/3 that do beat it have a few Googles/ Amazons, etc which pull the average to above the median 0%
Did worse than the market
Did better than the market
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(Negative excess returns)
(Positive excess returns)

22. Recap! Know your tolerance for risk Reap the benefits of compounding
Avoid emotional biases
Remain invested
Seek asset class diversification
Volatility matters
Utilize multiple strategies
PRIVATE & CONFIDENTIAL