GE-45624 (10/08) GE-46524 (10/08) AXA Advisors, LLC market volatility and your finances: navigating your finances during uncertain times
Nov 19, 2014
GE-45624 (10/08) GE-46524 (10/08) AXA Advisors, LLC
market volatility and your finances: navigating your finances during uncertain times
GE-45624 (10/08) GE-46524 (10/08) AXA Advisors, LLC
market volatility and your finances: navigating your finances during tough times
GE-45624 (10/08) GE-46524 (10/08) AXA Advisors, LLC
market volatility and your finances: navigating your finances during tough times
GE-45624 (10/08) GE-46524 (10/08) AXA Advisors, LLC
market volatility and your finances: navigating your finances during tough times
GE-45624 (10/08)
Information provided should not be construed as investment advice and you should seek professional advice
based on your specific personal circumstances.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any information
provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the
purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support
the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on
your particular circumstances from an independent tax advisor.
Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a
mutual fund or variable annuity. For a prospectus containing this and other information, please
contact a financial professional. Read it carefully before you invest or send money. Investing in mutual
funds and variable annuities involves risks, including possible loss of principal.
Life insurance and annuities are issued by AXA Equitable Life Insurance Company (New York, NY) and
co-distributed by affiliates AXA Advisors, LLC and AXA Distributors, LLC
important notes
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Market volatility and risk
Smart strategies in any market
Addressing risk
Steps to consider now
agenda
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market volatility and risk
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1 Past performance is not a guarantee or indicator of future performance
the U.S. in no stranger to turbulence, yet each
time we’ve recovered, and even grown.1
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U.S. history turbulent times: Great Depression
World War II
Black Monday — October 19, 1987
Dot.com Crash
9/11/2001
… 2008 Market Turmoil?
turbulent times in U.S. history
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market downturn
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Up close, market downturns look dire…
Black MondayOctober 19, 1987 –– Dow loses 508 points or 22.6%
Dow Jones Industrial AverageOctober 87–November 87
Source: Dow Jones, http://averages.dowjones.com/mdsidx/index.cfm?even=showavgIndexData.
This graph is for illustrative purposes only and is not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
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the big picture
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…but when seen as part of the big picture, they’re less significant
Source: SunGard PowerData (Tradeline).
This graph is for illustrative purposes only and is not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Dow Jones Industrial AverageOctober 87–November 87
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bear markets
Bear markets are a normal part of investing Generally defined as a downturn of 20% or more in broad market over
at least a two-month period
Typically occur approximately every six years1
Many caused by corrections to “bubbles” or by unexpected shocks
Often may not affect all sectors of economy at once
May not necessarily lead to recessions
Painful, but may result in healthy compression of economic excess to realistic levels
1 The New York Times "How This Bear Market Compares,” 10/11/2008; http://www.nytimes.com/interactive/2008/10/11/business/20081011_BEAR_MARKETS.html
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bear markets investment blunders
Bear markets are a normal part of investing Letting your emotions rule
Selling out entirely to cash
“Doubling down”
Randomly changing strategies
Ignoring your portfolio
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trying to time the market is risky
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–30
–20
–10
0
10
20
30
40% Return
1985 1995 2000 2005198019751970
• Annual return• Annual return minus best month
1990
Stocks are represented by the Standard & Poor’s 500®, which is an unmanaged group of securities and considered to be representative of the stock market in general. An investment cannot be made directly in an index. The data assumes reinvestment of income and does not account for taxes or transaction costs. This chart is for illustrative purposes only and is not indicative of any investment. Past performance is no guarantee of future results. © 2009 Morningstar, Inc. All rights reserved. 3/1/2009.
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inflation is a risk in asset accumulation
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Decreased purchasing power can deflate your portfolio’s value
Increases in expenses based on 3% annual inflation. Inflation varies from year to year. It was 13.5% in 1980 but 1.9% in 1986.
In the past 40 years (1968 – 2007), the average was 4.7%.*
Source: U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index, Consumers – (CPI-U), U.S. City Average, all items, 09/16/2008.
This chart is hypothetical and for illustrative purposes only.
Today 5 yrs 10 yrs 15 yrs 20 yrs 25 yrs 30 yrs
$74,000
$86,000
$99,000
$115,000
$143,000
$155,000
$180,000
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smart strategies in ANY market
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best practices
Practices that could make a difference, in good times or bad: A sound financial strategy
Diversification/asset allocation
Rebalancing
Careful investment selection
Dollar-cost averaging
Annual review
Risk-reducing productsinformation provided should not be construed as investment advice and you should seek professional advice based on your specific personal circumstances. None of these items independently or combined can protect against investment loss or guarantee a profit.
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The foundation of financial success, based on your individual goals and situation: Pursuing growth, income, or both
Your family’s needs
Adequate savings for emergency and opportunity
Time horizon
Risk tolerance/comfort level
Tax considerations
have a sound financial strategy
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Asset Class Performance, Historic Rate of Return (1998-2007)
diversification: because we can’t always pick each year’s winners
Past performance does not guarantee future results. Diversification does not guarantee a profit or protect against loss in a declining market. Securities are represented by the following indices: Investment Grade Bond = Barclays Capital Bond Index; International Stocks = MSCI EAFE Index; Large Cap Growth = Russell 1000® Growth Index; Large Cap Value = Russell 1000® Value Index; Small Cap Growth = Russell 2000® Growth Index; Small Cap Value = Russell 2000® Value Index; Mid Cap = Russell MidCap® Index. The Russell MidCap® Index is an unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000® Index, and is considered representative of the mid cap segment of the U.S. equity universe. The North American Real Estate Investment Trust Equity Index (NAREIT Equity) measures the performance of REITs listed on the New York Stock Exchange, NASDAQ, and the American Stock Exchange. The Barclays Capital Aggregate Bond Index covers the U.S. investment grade, fixed rate, taxable bond market, including government and credit securities, agency mortgage pass-through securities, asset-backed securities, and commercial mortgage-based securities. MSCI EAFE Index is an unmanaged index deemed by Morgan Stanley Capital International (“MSCI”) to be representative of the market structure of the developed equity markets in Europe, Australasia and the Far East. The Russell 1000® Growth Index is an unmanaged index of large cap common stocks that measures the performance of companies with high price-to-book ratios and high forecasted growth values. The Russell 1000® Value Index is an unmanaged index of large cap common stocks that measures the performance of companies with low price-to-book ratios and low forecasted growth values. The Russell 2000® Growth Index is an unmanaged index of small cap common stocks that measures the performance of companies with high price-to-book ratios and high forecasted growth values. The Russell 2000® Value Index is an unmanaged index of small cap common stocks that measures the performance of companies with low price-to-book ratios and low forecasted growth values. The indices represented are unmanaged and cannot be invested in directly, and do not represent any specific investment product..
This table is for illustrative purposes only. The indices represented are unmanaged and cannot be invested in directly, and do not represent any specific investment product. The return and principal value of any investment in stocks will fluctuate with changes in market conditions. U.S. Treasury Bills and government bonds are guaranteed as to the timely payment of interest and, if held to maturity, provide a guaranteed return of principal. Bond investments are subject to interest rate risk so that when interest rates rise, the prices of bonds can decrease and the investor can lose principal value. Small capitalization stocks are subject to a higher degree of market risk than large capitalization stocks of more established companies. Investments in international securities may mean potentially greater rewards, but also involve greater risk. The focus of non-diversified portfolios on fewer issuers or one market sector (e.g., real estate sector funds) makes them more susceptible to volatility and certain risks than diversified portfolios. GE 45624 (10/08)
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A sample portfolio …allocation changes overtime.
rebalancing: helping to preserve your asset allocation
These charts are hypothetical and for illustrative purposes only, and not indicative of any investment. Rebalancing does not guarantee a profit or protect against loss in a declining market. Past performance is no guarantee of future results.
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Don’t base selections on “hot tips” or hearsay
For stocks:
Analyze fundamentals including price/earnings, earnings per share, dividend payout
For bonds:
Research Moodys/S&P rating, interest rate trends, call date, etc.
For mutual funds:
Look at manager’s tenure and track record, current holdings, internal expenses, etc.
careful investment selection
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Lets you buy more shares when prices are low and fewer when they rise.The result is that dollar cost averaging typically provides a lower averagecost per share and therefore the potential for higher profit over time.
dollar-cost averaging
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This table is hypothetical and for illustrative purposes only and is not indicative of any investment. Please note that dollar-cost averaging does not guarantee a profit or protect against loss in a declining market. Dollar cost averaging involves continuously investing in securities regardless of fluctuating price levels, an investor should consider his/her ability to continue purchasing through low price periods.
Schedule Regular Investment
Market Price/Share
Shares Acquired
Accumulated Shares
Total Investment
Value
Month 1 $120 $5.00 24 24 $120
Month 2 $120 $2.50 48 72 $180Month 3 $120 $4.00 30 102 $408Month 4 $120 $6.00 20 122 $732Month 5 $120 $8.00 15 137 $1,096
Investment in 5 months: $600 for 137 shares –– Average cost per share: $4.38 Total Value: $1,096
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addressing risk
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Panic for some is opportunity for others
Determine your risk profile; act accordingly
Based on time horizon, assets, income and personality
Financial risks aren’t limited to the stock market
Inflation, death, disability, currency, loss of job, long-term care
One of the greatest risks may be doing nothing
Need to continually monitor your finances/risks and economy — or hire someone who will
risk is relative
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Minimize debt
Build an emergency fund
Get full insurance coverage
Life insurance
Health insurance
Auto and homeowners insurance
Disability insurance
Other insurance — liability, long-term care, casualty, business insurance
strategies for your family
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strategies for your investments
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Mutual funds
Asset allocation mutual funds
Target date mutual funds
Bear Market mutual funds
Products with guarantees
Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a mutual fund. For a prospectus containing this and other information, please contact a financial professional. Read it carefully before you invest or send money. Investing in mutual funds involves risks, including possible loss of principal.
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What is an annuity?
Fixed vs. variable annuities
Annuity benefits
Can be market-linked to help outpace inflation
Lifetime guarantees
Tax advantages
Death benefit; family protection
the benefits of annuities
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Tax deferral is not an additional benefit for the annuityif purchased to fund a qualified retirement plan.
Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable annuity. For a prospectus containing this and other information, please contact a financial professional. Read it carefully before you invest or send money. Guarantees are based on the claims-paying ability of the issuing insurance company.
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steps to consider
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Stay calm and alert
Conduct an immediate financial review
Clean up portfolio
Minimize debt
Build up cash reserve
Think of uncertainty as opportunity
steps to consider in turbulent markets
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Creates opportunities
Tax benefits
Reveals weaknesses
Opportunity to focus on portfolioand create better investing habits and better long-term plans
Sector rotation
uncertainty as an opportunity
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Experience
Reassurance — cool head
Resources
Big picture
Time savings for you
Less stress
benefits of using a financial professional
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Confirm your objectives
Factor in any changes in your situation
Determine your risk profile
Examine debt management
Ensure adequate protection
Evaluate individual investments
your financial review: a health checkup for your portfolio
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Volatility and downturns are part of the investment experience/process
Focus upon your long-term objectives and needs
Proper financial management takes time and experience, either by you or a financial professional
A turbulent period is the time to get serious, reduce debt and recommit yourself to better results
Uncertainty may be an opportunity; doing nothing is assuredly not
conclusion: key points to remember
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thank you
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