September 22


Living In A Cave

Let’s play a little game.

Let’s all get into a time machine and go back to 1998.


Ok, we made it. It is now 1998.

So here we are in 1998. You are retiring today and you have $100,000 to invest.

With that $100,000 you place 50% in bonds and 50% in stocks (the Barclay’s Aggregate Bond Index,and the S & P 500 index).

You then decide to start taking out $5000 a year from your $100,000 investment.

Remember, it is 1998 and you have just retired. You decide to go live on a secluded island in the Caribbean. The island you choose has no internet, TV, radio or newspapers. In fact, you have absolutely no idea what is happening in the outside world.

For 17 years you stay there; enjoying your tropical “off-the-grid” lifestyle. The only connection you have to the outside world is that each year $5,000 shows up in your Bahamian bank account from your investments.

Ok, fast forward to August of 2016. You have returned to the United States for the first time in 17 years, tan and care free. Remember, you have no idea what has happened to the world economy during that time. You have never once looked at a financial statement. All you know is that over the past 17 years you have received $5,000 each year (a little over $90,000 total) from your investments.

You go online to check your investment account. You are more than a little nervous. Is there any money left? Your hand trembles as it clicks on the ‘login’ button. What is the account balance remaining??


Started with $100,000. Took out $90,000. You now have $117,000.

I am using this specific time period on purpose. In hindsight, those were a rough 17 years. We experienced two rather extreme recessions during that time. In hindsight, 1998 is one of the worst times you could have ever retired and started taking income from your portfolio.

Imagine the same scenario, except this time you don’t live on an island for 17 years. In this scenario, you pour over your financial statements daily. You click on every scary article on the internet. You listen to all the financial talking heads on TV.

In 2000 you would have seen a loss and again in 2001 and 2002. In 2008 your account goes down by $21,000.

Panic time! Buy gold and build a bunker! The currency is going to collapse! Banks are going to fail! Buy! Sell! Act fast!

You may be thinking, “Dave, are you actually telling me I don’t have to be hyper-vigilant with my accounts? Are you saying that ‘staying on top’ of my investments is unnecessary? Are you saying that I should put a good plan in place and then trust the process?”

Yes, that is exactly what I’m saying. Plan. Invest. Live.

S&P 500 with Monthly Dividends: $50,000 initial investment on 01/01/1998. Dividends and capital gains are reinvested. Withdrawals of 5.00% (annually) of Initial Investment from 01/01/1998 to 08/31/2016 every month, on the last day of the month as long as funds are available. The initial investment is not subject to sales charge. The effects of income and capital gains taxes are not demonstrated. BARCLAYS U.S. AGGREGATE INDEX: $50,000 initial investment on 01/01/1998. Withdrawals of 5.00% (annually) of Initial Investment from 01/01/1998 to 08/31/2016 every month, on the last day of the month as long as funds are available. The effects of income and capital gains taxes are not demonstrated.

Figures shown are past results and are not predictive of results in future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For more current information and month-end results, visit Regular investing does not ensure a profit or protect against loss. Investors should consider their willingness to keep investing when share prices are declining. Indexes are unmanaged and, therefore, have no expenses. Results for the Lipper indexes do not reflect sales charges. There have been periods when the fund has lagged the index. While it is not possible to invest directly in an index, you can invest in an index fund.



The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings.

The value of fixed-income securities may be affected by changing interest rates and changes in credit ratings of the securities.

 Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index.  Actual results will vary.

This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel.

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