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2007 Total Returns- What’s yours?

The end of the year figures are in for 2007. Here they are:

Dow Jones Industrial Average 8.9%
S& P 500 Index 5.5%

Average of U.S Diversified stock funds 6.6%
Average taxable bond funds 4.4%

Growth funds this year outperformed Value funds mainly due to tech doing so well (+15.4%). The sector with the largest gain was Dow Jones World (+14.4%) and especially Latin America (+46.1%). No surprise there- can you say o-i-l?

The sector with the lowest return was the Russell 2000 Small Cap stocks (-1.6%) with small cap value in particular (-5.5%).

What does this all mean? Nothing. Nada. Zero.

The return that you need to meet your goals should match your risk tolerance and your tax bracket. However, I have seen small portfolios with tiny amounts in every sector and style that exists. Over diversification can cost you, too, by more fees and more unnecessary complexity.

Click here for examples of asset allocations for various size portfolios. (Subscribers will be sent a pdf to download.)

I will be sending out the newsletter this year twice a month. More freebies will be available to subscribers only so click on the link to subscribe.

Coaching Question- What is your targeted asset allocation for 2008 and why?

News Flash! –

I will be holding a FREE teleclass –The 7 Steps to Creating Your Own Financial Plan on Wednesday, January 16th, 6 p.m. PDT. Email me (fern@wholeheartedway.com) to register and you will receive the call in number.

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August 2007-- this column is produced by Whole-Hearted-Way and
provided by Fern Alix LaRocca CFP® EA