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What if you could invest your money like a $30 billion institution, like an endowment?
This is David Reyes, your Retirement Architect. If you want to reach out to me, it’s 1-800-611-1967.

So, we’ve built our firm around what’s called an Endowment Model. And what does that mean in English, Dave? What is an endowment? What do I care? Well, what David Swensen, who runs the Yale Endowment, a $35 billion endowment. It’s one of the tops. I think Yale is $50 billion.

Endowments are very much like a retirement plan. So, what happens is people give money to the university, let’s say Yale, and over the years it’s $30 billion, a big number. And what happens is, that endowment funds a lot of expenses for the university, like, tens of millions of dollars. And, typically, you’re looking at about a 5% distribution of those assets. Think about that, 5%.

So, retirement is no different. We have our bucket of money here, right, that we saved our whole lives for. And we have to fund expenses. What’s it cost to eat? To have our cars? To have our house? To go on vacation? Well, if you’ve done good planning, your vacation would be your biggest expense, hopefully.

And, so, an endowment is similar to a retirement plan. It’s treated the same way, save money, take distributions. The funny part is the distribution of the typical endowment fund to pay for university expenses – they’re allocated for that – is about 5%. That’s the goal, we want to be able to pay 5% out of this endowment. And that is the number, coincidentally, that we want our clients to have for distribution, about 5%. So, on a million dollars, I can tell you from experience, we need to take out about $50,000 a year.

Now, according to Morning Star, according to other people a lot smarter than I am, you can only take out about 2.8% of your portfolio value without running out of money. That’s like $28,000 a year, as opposed to $50,000, which is what we gear our clients for. Because I know that’s what you need to have a good retirement.

So, the reason I’m explaining this to you, and using the Endowment Model as the example, is if you looked at Yale – it’s online, you can see it, and I look at their reports every year. And David Swensen, who is kind of the Godfather of the Endowment Model, which that means is; how do we invest money beyond stocks and bonds? Because most of you only have a stock and bond portfolio, right? And you have 50% stock, 50% bond, and I can tell you it’s too much risk. The average one of you listening to me right now would have about a 30% loss in another recession, okay? And that is just not acceptable. I mean if you have a million dollars, can you afford to lose $300,000?

That’s why retirement, it’s not about making a bunch of money, it’s about maximizing cash flow. Period. End of story. What’s the most money safely we can take out of our portfolio without running out of money?

So, how do we create a more bulletproof portfolio? Because stocks and bonds are just not enough. Does it mean they are not part of the portfolio? No. But there are other things. So, I will tell you I’m looking at, this is fiscal year 2001 for Yale’s Endowment. And equities, domestic equities 15%, foreign equities 10%. So, in 2001, the Yale Endowment only owned 25% stock. 25% stock, that’s it. And their return that year was 9.2%. It doesn’t sound like outrageous but in 2001 the stock market was down 13%. So, Yale was up 9.2 and the stock market was down 13, okay?

How did they do that? Well, they had some fixed income. They also have what’s called private equity. They had hard assets, which we use real estate. So, he had 16.8% hard assets, which most of that was real estate. Out of the portfolio was only about 25% stocks, the rest hard assets, other alternative investments. He outperformed the S&P by what? 22%. Minus 13% for the S&P and he was up 9%, that’s a 22% differential.

In 2000, the market was down 10%. Yale Endowment was up 41%, that’s a 50% differential. That same year, there was about 14% domestic equity, 9% foreign equity, 23%. And he earned 41% return. I’m not saying I can do the same thing. What I’m telling you though is what’s important to know – not just the return, because Swensen and Yale Endowments outperformed the S&P significantly since 1985 when he took over the fund.

The reason I’m sharing this with you is because there are other assets besides stocks and bonds we can invest in that not only can give us more returns over time, but smooth out the returns.

So, we use other asset classes like real estate, like annuities. We are going to have one of the CEOs of one of the big real estate firms that we use in what’s called student housing, and we are going to have him on in a couple of weeks. His name is Bryan Nelson of NB Private Capital, worked with him for a long time. And we love student housing. It’s a great asset class. We have properties: USC, Notre Dame, Ole Miss, West Virginia, a new property at Kent State, Northwestern University, a new property in Austin.

So, these are great investments. They pay good yields, right now in the 6% range. They are also tax favorable. So, we can actually reduce taxes and have more income. Again, tax is a cost. So, things like real estate, even annuities. And annuities I consider as an alternative. It’s not a stock or a bond, right? It’s an annuity. So that’s another diversifier.

Say if I own stocks and bonds and I own part of my investments in real estate, I own an annuity. You start seeing what’s happening. Now, we have these tranches of assets. All of a sudden, I’m not relying on the returns of the stock and bond market, which I cannot control anyway, for my retirement. So that’s kind of crazy.

So, if you want to learn how to build a portfolio, how we build portfolios, how we are completely different – I always say, “If you want a second opinion from somebody that’s going to be antithesis of our industry, then at least sit down with me.” Because I promise you’re going to learn something that you didn’t know, for sure. Another idea. You may not like it, but that is just the way we run our firm, and at least you will get something totally different than what have today. And I can say that with about 99% certainty because most of you have the same type of portfolio, some iteration of stocks and bonds.

So, if you want to get a second opinion from me, talk about your portfolio, show you how we do things differently, look at the fees of your portfolio – which we typically will reduce in half – give me a call at 1-800-611-1967. Or go to

So, again, an endowment investing is really kind of code word for not using just stocks and bonds as investments. We are going to use other investments, like real estate, have a hard asset, right? What does the income stream from an apartment building next to a student housing next to USC have to do with the stock market going down 50%? Zero. That means that we’re now on investments that are not correlated to the stock market or bond market. That reduces risk of the stock and bond market. It also has its own returns. Its own growth rates.

So, you start layering on these other asset classes – and I will argue, and I have proof of this – is that you’re going to have a lower volatility in your portfolio, and you have the opportunity to outperform the market, over time. It’s kind of the Tortoise and The Hare. Are we going to earn 20, 30% a year? No. But if we can earn 5-7%, like hitting singles and doubles, over the years and not go through the 50% downturns, we are going to do really well. So, again, if you want to reach out to me for a complimentary second opinion, give me a call 1-800-611-1967. That’s 1-800-611-1967. Or go to

So, as I mentioned, we are going to start having workshops, that will be posted on our website, that we are going to do at our offices in La Jolla, just to do more intimate workshops. I do a lot of public workshops. We do workshops for corporations, for different businesses. So, we want to do something a little more intimate. No more than probably 10, 12 people and do these more frequently. So just go to our website and you can receive information on that. Or call our offices, again, 1-800-611-1967 and ask for Crystal. She will be able to help you with that. She is awesome and she is in charge of all these workshops. So, I’m just happy to announce that. I will be giving you more dates and times as I get these. But we will be advertising these times and dates regardless.

So, we talked about endowment investing and why we feel it’s superior. How do we create asset classes that are not correlated to stock and bond markets? I can tell you from experience, if you just own a portfolio of stocks and bonds during the next financial crisis that we are going to have – I mean it’s not if, it’s just when and how much – you are going to be kicking yourself.

So, get a second opinion, whether it is from me or somebody else. I always say get it from two people. Get one from me, get one from somebody else and whoever you like better, like what they do, then hire them. But at least look at what you own because I will tell you, you don’t know what you own. And right now, you’re in a great position because the market has recovered a lot of its losses from last year. But we are still nowhere. We’ve gone nowhere. The stock market is exactly where it was almost a year and half ago – about 15, 16 months ago.

So, you’ve gone through, basically, a heart attack of going up 10%, down 10%, up 10%, down 20%, up 20%. I’m getting tired saying that because that’s like the EKG, right? You’re having a heart attack. Investing money that way is just insanity. And here is the good part, you don’t need to do that. You will have more success by having more asset classes in your portfolio, beyond stocks and bonds, earning mid- to high-single digit returns more consistently, being more taxed advantaged, reducing fees. All of those things will contribute to a higher success.

So, again, if you want to reach out to me, please do for a complimentary, free second opinion. You know, I will evaluate your portfolio. I will look at the fees you’re paying. I will look at the risk that you have in the portfolio. I will also do a complimentary retirement income plan for you that I would love to do. So, again, if you want to meet with me, give me a call at 1-800-611-1967. Or, go to

That is all the time I have for today. I look forward to next week. God Bless. And I will see soon.

Check out this video to get some insight into David's personal story which lends to the purpose in his passion to help his clients achieve retirement success.

Context is always beneficial to ensuring you are matched with the right advisor and David's story brings you just that; a level of understanding to the WHY he works so hard to create a plan to fit your needs.

Hi everyone and thanks for joining me today. I thought it would be appropriate; I don’t think I’ve shared this with you personally before but my story. Because I think it is important to know where somebody comes from, how they see the world, paradigm about life. Whether it’s a friend that you have, whether it’s a doctor, how do they perceive the world? For me, that’s super important in relationships.

And I can tell you, it started a long time ago, when my parents got divorced when I was 2. Obviously, I didn’t know that they got divorced and I was very blessed to have my grandmother and grandfather, Edna and Kermit, to help take care of me. Because I had a single mother, I ended up having two other brothers and sisters. So very, very difficult for my mom. So I would spend a lot of my summers, a lot of time with my grandparents, Edna and Kermit.

My grandmother passed away way too early. She had a lot of health issues. She died in her early 70s. And my grandfather got to live a full and long life. He use to work for Sears, Sears Roebuck. In fact, they just got saved out of bankruptcy. I think the CEO bought the company. Thank God because what a storied company.

And my grandfather worked there for, I believe, like 30 years. And he was a television repairman back when that was an actual job. Now we can barely fix our cars or our TV anymore. But I use to remember my grandfather behind our own TV – I think it was a Zenith – and fixing the tubes or whatever he called them. He drove the white van with the red letters and the ladder on top. I would be waiting for him to come home. And that was a big, big imagine for me.

In fact, my first, I guess, foray, for a lack of a better term, into business and into finance was my grandfather owned Sears stock, which back then was very, very profitable company. And every Sunday we would go through, I remember putting my finger on the business section looking for the ‘S’ for Sears stock because his whole pension was tied to Sears stock. So he cared very, very much about the value of his stock.

He was a frugal man; saved his pennies, was not wealthy by any stretch. But was free and clear with his house, saved his money, had a little bit of a pension. And fortunately like a lot of folks that were around – a lot of family members and friends – he was diagnosed with dementia. And he private paid so he paid for his own care for about 3 or 4 years, and he ran out of money, which is unfortunate.

He then qualified for MediAccount. It’s called for Medi-Cal across the country. In order to qualify you can only have $2000 in the bank, a burial plot, a wedding ring, a house and a car. That’s basically your life is over. Your life savings is gone, and now you’re basically indigent. It’s a welfare program, Medi-Cal is.

So he was taken care of by Medi-Cal for another couple of years, and then he passed away. Add insult to injury, I received a phone from my mother crying and saying, “I just got a notice from Health and Human Resources that there is a lien on our property for $20,000 due to the fact that he had received benefits from Medi-Cal.” And that was very stressful. And this was the first year I was in the business in 1995.

And so the people who were my clients, my family was coming to me for advise and I know zero about this stuff. So long story short, hiring an attorney – an elder law attorney – figured this stuff out. We were able to save the home. He taught me a lot. But the one thing it taught me – why I do what I do in retirement planning – is that I watched in my first year of the business my grandfather and grandmother lose everything they had. That has an impact on me.

There is a lot of you out there, who are my clients – you included – knew their parents were called ‘Depression Babies.’ Right? Banks failed, 25% unemployment. They didn’t trust banks. They’re very nervous about markets. And so when I came into the business in ‘95, I came from that mindset, “Of, wow. We have to protect what we have first.” And so doing retirement planning for now over 20 years, what it has taught me is that we have to protect capital first, then grow capital, and then create income from that capital.

So I hope that helps you to see the world through my eyes, through my paradigm. And why that we do what we do. Why do what I do. And the perspective that I have and hopefully that helps you learn about me and the firm.

Watch the video above to get important updates from David's latest successful retirement creation "The Perfect Annuity"

“Inflation is as violent as a mugger, as frightening as an armed robber, and deadly as a hitman.” That was Ronald Reagan in 1980 when he took over the economy, when interests rates were 13-1/2%. During the decade of the 70s and 80s, up until ‘81, interest, inflation averaged 7-1/2%, which is crazy. That means the costs of goods in a 10-year time frame doubled. We hadn’t had inflation for a long time but it will come again.


And the reason I want to talk about inflation and investing is because it is a super important part of investing. And most of us don’t really count for that. And one of the things we’ve been told through investing is that it’s a good way to – why you invest in stocks is one way to mitigate the cost of inflation. It is just kind of what said and it’s wrong. Because that works until it doesn’t. So if you’re earning in a portfolio of 5, 6, 7% a year and then all of a sudden go through a 2008 and you lose half your money, well that really didn’t help you with inflation, did it?


So one of the things that we focus on is how do we safely increase our income in retirement. And I call this the Perfect Annuity. I’m writing – this is a chapter in my new upcoming book with Jack Canfield called Momma’s Secret Recipe on a Successful Retirement. And it’s called the Perfect Annuities, this chapter. And I call it that, which I made up – I may trademark that, that’s a good slogan, “The Perfect Annuity” – is that it allows you to also have guaranteed lifetime income but also get increases in your income for inflation purposes. And very few people know about this, and it’s something we use as a foundation for planning.


Not only do you want income to last for the rest of our life but also it’s going to give us the opportunity to keep up with inflation. As I mentioned, inflation ran rampant, as most of you know that lived through this time in 70s, was double digits and high single digits. So there’s multiple ways that we use this strategy. And I’m going to give you the most straight forward – there’s three different ways this is credited.


Just think of it this way. So what happens is you’re going to get credit. So let’s just say you have $100,000 in an annuity. And every time there is a positive return in the market this is tied to you’re going to get that increase in your income. For instance, if the market went up 5%, this index went up 5%, you get a 5% increase. If the market goes down 20, you don’t get an increase that year.


So instead of getting the rate of return, that rate of return transforms into an increase in income. So it grows based upon the value of that index but once you take income that increase is going to increase your income. So I’m going to use like 3% to make it simple. It could be lower than that. It could be higher than that. But I’m going to use that as an example.


So if you had $100,000 in your account, and your one in the market was up 5% for this index, you got 3. If the market is up the next year 10%, you get 3. If the market is down 20%, you get zero. So over the first three years, you got two 3% increases in your invests, in your income. And over a 20-year period from age, let’s say, 60-80 that would basically be almost doubling your income. That’s pretty significant.


So I just did a case for a client that has a net about million dollars. And we used half of it for income purposes. In this case we just used an annuity. There’s other ways. And they were going to receive $20,000 a year for life from this income annuity. So we put them in the increase-in- income annuity and from age 60 to age 80, basically, their income almost doubled. And we need that. That’s just earning 3-1/2% per year will actually double your income over basically a 20-year time frame.


So over that 20-year period, it’s a little less than double but the fact is we need that kind of safe income and increase in income. And when I talk to clients about this, they’re just very surprised that you can do this type of planning. So not only do we get this increase in income, the best part is it is like a pension.


So we always do what’s called joint life expectancy. What that means is if, let’s say, it’s your husband IRA and he has $500,000 and we put this money into an annuity, and you’re getting $20,000 a year for the rest of your life and also we’re going to increase in income, which almost doubles in 20 years. Guess what? If you precede your wife, she gets the same amount of money. The same increases. And if there is enough money left over, your children get that.


Because one of the biggest knocks on annuities is 1)  That your insurance company will receive your money. They are the beneficiary of your money. This is not true with most annuities. And secondarily, does that income pass onto your spouse?


I’m giving you a real important investment strategy. We want to increase-in-income annuity. I call it the Perfect Annuity, and it’s in the chapter of my new book. And if you want to reach out to me and talk more about this, just call us at (858) 597-1966!

Click on the video to watch The Retirement Architect, David Reyes Live! In Studio




“It’s important that people deal with someone to make sure to prove and provide that guaranteed lifetime income.”


Did you know that 1 in 5 investors know which funds they own? And that’s pretty unbelievable. The Retirement Architect, David Reyes , every weekend here with you. Thanks for listening. If you want to reach to me personally call our office at (858) 597-1966 or go to our website.

So, again, only 1 in 5 investors can actually name their funds. And that’s actually a high number. I think it’s closer to like 90%  have not only not know the funds they own, but they have no idea about their portfolio, their portfolio risk and really the composition. And it’s kind of scary. When I do initial meetings, initial consultations where I’m getting to you know as a client, as a perspective client, I really focus – the first thing I always talk about is your portfolio. I will spend a lot time – sometimes it can be 45 minutes, half an hour, could be an hour. It depends upon the time it takes to teach you what you have, because for some of you it could be much more difficult that are really not involved in the finances directly.

But either way, I would say 1 in 10 maybe have a good idea about their portfolio. So it’s very low. And that’s concerning to me because how are you going to make good financial decisions if you have no idea what’s in your portfolio? It sounds kind of crazy, doesn’t it? But it’s just the way it is. So it’s a big part of what we do is breaking down your portfolio.

We do a whole stress test, we call it. We take every one of your securities and we’ll break them down in to how much you own in stocks, how much you own in bonds, what the risk of your portfolio is if we have another Financial Crisis, which we will again. I’m an optimistic guy, so I’m not a doom and gloomer. But, unfortunately, you know, we’ve had two in the last in the 18 years. We’ve had a 10-year bull market. We’re definitely overdue time wise. It doesn’t mean it’s going to happen tomorrow. This market could last another one or two years, or longer. I mean, I don’t know. But it is now officially the longest bull market ever.

So you really need to know what you own.

So I’m going to share a story with you with a brand new client. And I went through all the things that I’m talking to you about first, we analyze her portfolio. Her name is Susan. And we went through her whole portfolio. And broke down how much she owed in stocks and bonds.

And one of the unfortunately things about you as an investor, is that that’s the only two assets classes that are available to invest in. And that’s just not the case. So not only is there other things to invest besides stocks and bonds, but there’s other things to invest in that can actually reduce the risk of your portfolio that have nothing to do with the stock or bond market, which is a true diversifier. Because we don’t want all of our investments to rise up and down with the stock or bond market because then we’re really just relying on the whim. If the market gives me this money, then we’ll make money. If the markets not, we’re losing money. We’ll talk more about that as we go along.

But I want to focus on Susan and her portfolio. So we spent, I would say, 30-45 minutes getting her up to speed. She was pretty quick about understanding.

So when I educate somebody I have to feel comfortable that you understand, or I can’t take you on as a client. If I don’t feel you understand the basic concepts of what you own, and also what we are proposing, I can’t work with you because I’m responsible. Now, that doesn’t happen very often because I’m patient and I will sit down with you and educate you, not only what you have but what we are proposing.

And so Susan had her portfolio, again, it’s 50% stocks, 50% bonds. And she’s really concerned about the stock market. She has about a million dollars and it’s all she’s ever gonna have. She saved her pennies and, you know, she is ready to retire. And she really needs income right now. So I looked through her portfolio. And she was complaining because she hadn’t made any money, literally, over the last like year plus. And she was really upset with her adviser. She said, “Look, I haven’t made any money. So I wanted to figure out why.”

Here’s the problem. Bonds have been a difficult asset class for two years now. The rates have been rising really since 2016, July of 2016. So if you own bonds in your portfolio, you’ve actually lost money. And, unfortunately, most advisers are only investing your money stocks and/or bonds. So why would you want an asset class that has been losing money? The Federal Reserve is raising interest rates. And as rates rise, the value of your bond portfolio is going to go down.



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The Little Red Book of Retirement Chapter 1

The financial services industry uses HNW as a classification to designate an individual or family of high net worth. Every region and financial institution classifies high net worth differently, but generally, they are grouped based upon a given dollar amount of their liquid assets. HNW can qualify for separately managed investment accounts instead of regular mutual funds depending on the financial institution and their minimum standards for HNW classification. Most banks will only give special HNW treatment for those who qualify by maintaining a specified amount in liquid assets and/or a certain amount in depository accounts.

All liquid and near-liquid assets (cash, brokerage and bank accounts, retirements, 401 k’s trusts, etc) that can be readily converted into cash are known as invest-able assets. They do not include the value of certain “physical” assets such as real estate, automobiles, art, jewelry, furniture, collectibles, or equity in a business.

The specific definition varies, but by most standards a “High Net Worth Individual” (HNWI) has at least $1 million of liquid, invest able assets. If that individual, either alone or together with a spouse has a net worth of over $1 million they can also be classified as an “accredited investor”.

For many, an “affluent” individual is someone who has less than $1 million, but more than $100,000 of invest-able assets. But once you achieve the 30-million dollar mark you’ll be considered an “Ultra High Net Worth” investor.

Read below for David's personal insight and the inspiration behind this chapter:

We’re going to continue our series on The Little Red Book Of Retirement, our latest book, my latest book, for high-net-worth clients. I get the question all the time, “What is high-net-worth client?” Really, it’s just an industry term that classifies how much a family, or an individual, has in their portfolios. And every region is a little different. And each firm kind of classifies it differently. But the good thing about high-net-worth clients is they can qualify for what’s called simply managed accounts, as opposed to just mutual funds.

And the reason that’s important is that if you have a simply managed account, it is what it says. It’s simply managed. It’s for you. It’s like your own fund. And the reason that’s important is because 1)  Your taxation is going to be a lot less because we get to decide –  you get to decide –  when we buy and sell certain securities. And also we get the luxury of having to pick our own securities and, typically, the cost are a lot less than traditional mutual funds, significantly.

And so one of the high-net-worth client, relative to net worth, typically, you’re talking about a million dollars or higher. That’s the industry standard of high-net-worth clients. And those assets are typically 401k(s), mutual funds, brokerage accounts, bank assets, CDs, cash. All those types of assets are what are considered in a portfolio. What’s not considered is real estate, automobiles, equity in a house, equity in a business. Those are the things that are not considered part of investible assets, part of what a high-net-worth client has.

So our minimum as a firm is about $500,000. And the reason we have minimums, our average clients really in the one to two million dollars of investable assets or higher. And the reason we work with clients like that, like yourself, is that you need planning. You saved money. You need planning. We need more than an investment plan. We need a retirement income plan.

You can download the entire book of The Little Red Book Of Retirement for high-net-worth clients by clicking here: DOWNLOAD HERE , and also take advantage of our second opinion where I will talk about ways to reduce your taxes, increase your income, and just have an overall better experience in retirement.

The Little Red Book of Retirement - The Foreword

In 1995,  my first  year as  an  advisor,  my  grandfather  passed  away  after fighting dementia for over five years. The experience was not only emotionally devastating but financially devastating as well. The cost of his care completely bankrupted  his estate, teaching me a valuable lesson. Proper planning and the protection of capital are the most important attributes to a successful retirement. Unfortunately, most of you have not implemented the planning that is required.

The question that may be difficult is, "What is proper financial planning? Most of  you are not able to  answer  this question, but what is most concerning  is that most advisors cannot answer this question either. Have you ever asked your advisor, "How is my retirement plan?" The answer is usually ''Don't worry about it, you will be fine."In many cases, there has been no real retirement income planning, only some type of investment portfolio. An investment plan is NOT a retirement plan. S0 what is a proper retirement plan? Not only does a plan need to be implemented but also integrated. You need to have a retirement income distribution plan, that includes a budget, social security planning, tax minimization and estate planning.  Most importantly, this plan needs to be in writing. This requires a lot of work and most advisors do not have the experience nor the desire to do  this work.  Most firms are only concerned about managing your money not creating a comprehensive retirement plan. The big "bank owned'' firms employ  thousands of advisors making it nearly impossible to train them all to apply this type of strategic planning. Their primary objective is to gather assets under management, not to do real retirement planning.

Do you have a comprehensive plan that includes everything that I mentioned?  If not, then you will not have the most secure , successful and stress-free retirement possible. A word that is overused and very misleading is diversification. If you are diversified, or  have a balanced portfolio everything will be ok. WRONG! I have a word for this, "Di-worse-ification".  There are two real problems with this: first, clients feel overconfident that their portfolio will be protected.

Second, when you need diversification the most ...  it does not work.  You would think  that in a bear market (or down market) that  if you are diversified you would not suffer significant loses. For example, in the 2008 financial crisis, if  you  had  a portfolio mix of 60% stocks and 40% bonds, you were down as much as 30%, that is $300k of a $1M portfolio. Are you comfortable with that type of loss? I can tell you from meeting hundreds of clients over 20 years, that the answer is NO. I always ask the question, how much are you willing  to lose in your portfolio?".  Can you guess what the number one answer is? I want to lose Nothing! Once we have a real conversation about risk, most of you do not want to lose any more than 5- 10% at any time during your retirement. Losing $50k - $100k is far different than $300k.  In addition, a 10% loss only requires an 11 % gain to get back to even, while incurring a 30%  loss will  take a 43% return  to get back to even. This can take up to 5 years! Not only have  you  lost a  lot of money as well as a lot of sleep but most importantly, you lost a lot of time.

Time is the only thing we can never get back.

So, what  is  the  answer?  In  retirement,  we  need  three  things  to  ensure  the safety of  our portfolio. First, we absolutely need diversification, but with most advisors that is where it stops. A diversified portfolio of stocks and bonds is not enough. Second, we need to diversify with the use of other strategies. We may want to use other asset classes like hard assets such as real estate. We may also want to use principal protected annuities for guaranteed lifetime income. There are also several other strategies that we use to help reduce risk and increase portfolio performance. The  one  thing  that  they  all  have  in  common  though,  is that they have no correlation to the stock market. The overall returns of these non-correlated  strategies are  not  dependent  on  the  movement  of  the  stock market, but  on  the  individual  strategy.   The third strategy to help ensure the safety of  your portfolio  in  retirement   is  to   have  some type of  downside protection in your plan. This can be done a couple of different ways. One is the use  of financial  instruments  that  act  as  a form  of  insurance,  not  guaranteed principal  protection;  but  securities  you can invest  in  that  will  go  up  as,  the market goes down, creating a floor on the portfolio. Another is using stop-loss strategies  that  will  pre-set  the  maximum amount of  loss,  usually  5  to  1 0 %. Finally, you could use low or zero fee fixed-indexed annuities that has principal protection in which you participate in some of the upside of the stock market but do not participate in the losses.

If you only receive 50%  of the S&P 500  returns and none of the downside, you can beat the market.

Finally, my only job as your advisor is to make sure you have the best retirement possible, with the least amount of risk and ensure you never run out of money.

I hope this book gives you some insight into what is needed and what is possible.



Read below for David's personal message found in this video:


Thanks for joining me this week. We are going to do our weekly blog-vlog here today. And I’m excited to talk about our new book, The Little Red Book Of Retirement. I am going to do a series here going through each of the chapters. They are small. Really proud of the book. It just came out a couple of months ago, very readable. And I’m excited to share this with you.

So my impetus to do what I do, in par to writing this book, was that, you know, 1995 was my first year in the business and green behind the ears as an adviser. I was 27-years-old. And unfortunately my grandfather passed away, which was very devastating. Unfortunately he was diagnosed with dementia about five years earlier. He worked for Sears back in the 70s – 60s and 70s when that was a very successful company. He owned Sears stock and had a good retirement. Again, he wasn’t a wealthy man. He was just very conservative. His home was paid off, all those kind of good things. Social Security. He had a really good life.

Problem is that he private paid in his long-term care. I mean he used his own money. And then he qualified for Medi-Cal. When you qualify for Medi-Cal, basically, you’re bankrupt. You can only have $2000 in the bank, a burial plot, a wedding ring, a car and a home. So not good. Save your whole life to have nothing in the end. And so that really taught me a big lesson about how to manage money, how to protect against capital loss and devastation of capital.

And so you need to have proper planning to deal with these things, holistic integrated planning. And, unfortunately, you know, most of you don’t know what that means. And most of you don’t have this type of planning – which is really sad is most advisers are not interested in this type of planning because it takes a lot of work. Most of advisory firms – I’m not picking on them, it’s just what they do, the big firms like Merrill and those types of firms – basically, you’re doing asset allocations. They are taking your investments and doing this pie chart, pretty little pie chart – these different colors and really pretty, but the fact is, it just doesn’t work. What you learned about diversification of portfolios in retirement does not work.

Let me give you an example. In 2008, the market was down at one point in time 55%. Bank stocks were down 80%. Devastation. The average balance portfolio of stocks and bonds was down 30%. Let me ask you a question. Does that sound conservative to you? No. But you were sold, or you were told that this type of balance of stocks and bonds would be something conservative and would be okay with you in retirement. Well, that is just too much of a loss. It is too much of a risk. So if you had a million dollars in 2008, you lost $300,000.

Now,  our firm is not – we are not going to have that kind drawdown in our type of portfolios. But the problem is you need to worry about this stuff because most of you have an investment plan, which I will disagree with most times, but we don’t have a retirement income distribution plan. And that takes a lot more effort and skill and experience doing this for 22 years. And you have to really want to do it. It is a lot of work.

But in order to have the proper retirement planning you need to have this type of comprehensive, integrative planning, such as a retirement income distribution plan. We want to make sure we stress test your assets to make sure that we are not taking undo risk. We want to have a fee analysis, make sure paying the least amount of fees. We want to have a written plan. And, unfortunately, I have not run across one client that has all of these things that we need to have a stress-free retirement.

So we like to call it “The People Have The Worseversification.” So you’re diversified but the fact is that is not enough. We can’t afford to lose 30% in the down market. So one of the things we need to have is – secondly, we need to have diversification not just by asset class, but by actual different types of strategies, like real estate. Because, for instance, we don’t want to suffer losses like in 2008 we talked about, again, the 60/40 portfolio stocks and bonds was down 30%. So one of the things we want to do to help mitigate risk is we want to have assets like real estate, other assets may even be annuities. Other things that are not correlated to the stock market. So the stock market goes down 20, 30, 40, 50%, we have other assets to help to mitigate that loss and it also to have their own returns.

So, for instance, real estate’s a great asset class to give as an example that we use quite a bit is a hard asset because when the market goes down, is the income from that real estate going to go down 50%? No. So we have real estate properties, and in no way did your income drop by 50% in your real estate? No. So real estate I’m giving you one example of many that we use to help mitigate risk.

So we want to diversify within our stocks and bonds, that’s good advice. We want to do that but it’s not enough. We want, also, to diversify by strategy that other strategies that do not rely on the stock market for their returns.

What’s the nature of these things? First, we need absolute diversification. We need to be in investments like I talked about that have all these attributes that will give us our truly diversified portfolio. The third thing we want to see is that we want to have some risk management to the stock portfolio, the equity side, which most of you don’t have either. Because it does take some work.

What do I mean by that? What I mean is diversification is not enough, so if the market is going to fall 30%, your portfolio in an ‘08 financial crisis, what can we do to help mitigate those losses above and beyond the additional diversification that we are doing? We use strategies to help insure the portfolio, not like we’re buying an insurance policy but to help mitigate the downside. We insure everything. We insure our homes. We insure our life, our health, all these things. But why do we not do insurance, or use insurance, a {6:16} form of insurance for a downside protection to protect against catastrophic risk – what we do for our clients.

Let me give you an example. One of our basic strategy is what’s called a Stop, Launch Strategy. Let’s say you have a million dollars in one of our stock portfolios. We’re going to put a predetermined amount of loss is going to be a maximum of 10%. Now, if the market goes down 30 or 40, we’re capped at 10, so that’s one way to mitigate risk. The average person, the average one of you that I’m doing reviews for, your average loss is about 30%. Average, and you considered yourself a conservative investor and you’re really not investing conservatively, and you just don’t know it. So those are the things that we do.

This is the first set of a series I’m going to do. So the bottom line is I want to teach you how to mitigate risk, how to maximize return. We want our cake and eat it. So our goal is to mitigate risk, mitigate volatility, and have the opportunity for more income and more returns.

So join me next time. We’re going to talk about, again, our next addition is going to be the next chapter here on The Little Red Book of Retirement.

Thank you.

Click on the link to watch the attached video to learn more about: What are RMD's and How are they Determined?

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