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SoundMark

Soundmark Wealth Management, LLC provides wealth management services to its clients through integration of a diversified 'passive asset class' philosophy using primarily institutional class index funds.

Coffeehouse Returns

Below is a simple investment portfolio, long advocated at the Coffeehouse.

But before you read any further, please be aware that this portfolio isn’t necessarily the right portfolio for you. The right portfolio for you can only be determined after you have first created your long term financial plan.

In the midst of the worst investing climate in the past quarter century, diversification speaks for itself.

Remember, past performance is no guarantee of future returns. But a simple philosophy of creating a long term financial plan, diversifying in different baskets and capturing the entire return of each basket, has a far greater chance of serving you well than trying to keep up with the whims of the Wall Street crowd.

Would you like to go back in time and check on a simulated Coffeehouse Portfolio? Here are the numbers, assuming the portfolio was rebalanced yearly to its original allocation….

(Note: For portfolios that were not rebalanced, the 10 year annualized return was about .5% less.)

Year Return
1991 23.55%
1992 9.57%
1993 15.65%
1994 -0.58%
1995 22.90%
1996 14.53%
1997 17.95%
1998 6.89%
1999 8.30%
2000 7.25%
2001 1.88%
2002 -5.56%
2003 23.54%
2004 13.80%
2005 6.24%
2006 15.15%
2007 2.63%
2008 -20.21%
2009 20.26%
2010 14.68%
2011 2.06%
2012 11.93%
 2013  14.88%
20 YEARS 8.87%
10 YEARS 7.51%
5 YEARS 12.6%
3 YEARS 9.48%

 

Remember, past returns are not indicative of future returns.

In fact, if history is any guide, future returns are likely to be LESS than past returns.

You can’t afford to tune in to Wall Street and make the same mistakes in the future that you’ve made in the past, and hope to reach your financial goals.

That is why the 3 Coffeehouse Principles:

  1. Developing a long term financial plan
  2. Diversifying in different asset classes
  3. Capturing the entire return of each asset class

…are more important than ever before.