Goal Setting"The indispensable first step to getting the

things you want out of life is this…

Decide what you want.”

• Retirement – when…how much…• Home Purchase• Match Asset and Liabilities

Fairport Asset Management, LLC

10 Questions to ask advisor, broker etc.1. What services will we receive?2. What will be the fees for these services? Any extra or hidden

charges? How are you compensated? 3. Who will be our personal account person? For how long? 4. How will we determine the asset allocation of our portfolio? 5. What is your typical client engagement, what is average account

size? 6. What detailed information will we receive on the portfolio holdings? 7. What are the terms of any termination of your services? 8. Please review the performance of your investment services

compared to national indices and competitors. 9. What are the mechanics of receiving access to our money in case of

emergency? 10. I assume that you provide the necessary reports for income tax

preparation.

Fairport Asset Management, LLC

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Real Estate Large-Cap Large-Cap International Real Estate Real Estate Commodities International Real Estate InternationalBEST Emerging Emerging Emerging

35.8% 33.4% 28.6% 66.5% 25.9% 15.5% 23.9% 55.9% 30.4% 34.0%

Large-Cap Mid-Cap International International Commodities Fixed Fixed Small-Cap International Commodities Developed Developed Emerging

23.0% 32.3% 20.0% 27.0% 24.2% 8.4% 10.3% 38.8% 25.6% 17.5%

Small-Cap Small-Cap Mid-Cap Large-Cap Mid-Cap Small-Cap Real Estate International Small-Cap InternationalDeveloped Developed

21.3% 25.6% 19.1% 21.0% 17.5% 6.5% 5.2% 38.6% 22.7% 13.5%

Mid-Cap Real Estate Fixed Commodities Small-Cap Mid-Cap International Real Estate International Mid-CapEmerging Developed

19.2% 18.9% 8.7% 17.3% 11.8% -0.6% -6.2% 38.5% 20.3% 12.6%

International Fixed Small-Cap Mid-Cap Fixed International Mid-Cap Mid-Cap Mid-Cap Real EstateDeveloped Emerging

6.1% 9.7% -1.3% 14.7% 11.6% -2.6% -14.5% 35.6% 16.5% 8.3%

International International Commodities Small-Cap Large-Cap Large-Cap Small-Cap Large-Cap Large-Cap Small-CapEmerging Developed

6.0% 1.8% -13.2% 12.4% -9.1% -11.9% -14.6% 28.7% 10.9% 7.7%

Fixed Commodities Real Estate Fixed International International International Commodities Commodities Large-CapDeveloped Developed Developed

3.6% -5.0% -18.8% -0.8% -14.2% -21.7% -15.6% 22.7% 7.6% 4.9%

Commodities International International Real Estate International Commodities Large-Cap Fixed Fixed Fixed Emerging Emerging Emerging

WORST

1.3% -11.6% -25.3% -6.5% -30.8% -22.3% -22.1% 4.1% 4.3% 2.4%

Fixed Income - Lehman Bros. US Aggregate Index

Real Estate - NAREIT All REIT

Mid-Cap - S&P Mid Cap 400 Index

International Developed - MSCI EAFE Index

Commodities - Dow Jones Commodities Index

International Emergings - MSCI Emerging Mkts IndexWEB: www.fairportasset.com

TOLL FREE: 1-800-222-7459

PHONE: 216-431-3000

Historical Illustration of Diversification Through Market IndicesAnnual Total Returns (1996 - 2005)

Ranked best to worst in order of performance

Large Cap - S&P 500 Index

3636 Euclid Avenue

Fairport Asset Management, LLC Small-Cap - S&P Small Cap 600 Index

Cleveland, OH 44115

11

12

13

14

15

9 11 13 15 17 19 21 23 25 27

Standard Deviation

Co

mp

ou

nd

An

nu

al R

etu

rn

1 Asset Class Portfolio

2 Asset Class Portfolio

3 Asset Class Portfolio

4 Asset Class Portfolio

C (Real Estate Securities)

A (U.S. Stocks)B (Non-U.S. Stocks)

D (Commodities)

CD

BD

ADAC

BC

AB

ABC

ABD

BCDACD

ABCD

Four-Asset-Class Diversification1972 -- 2004

The Five Worst Years 1972 -- 2004

Portfolio Structures

A U.S. Stocks

B Non-U.S. Stocks

C Real Estate Securities

D Commodities

ABCD Equal Allocation

Year Return Year Return Year Return Year Return Year Return

1974 -26.45 1990 -23.20 1974 -21.42 1998 -35.75 2001 - 12.77

2002 -22.12 1974 -22.15 1998 -17.51 2001 -31.93 1974 - 7.63

1973 -14.67 2001 -21.21 1973 -15.52 1981 -23.01 1981 - 5.73

2001 -11.88 2002 -15.66 1990 -15.34 1975 -17.22 1990 - 3.16

2000 - 9.13 1973 -14.17 1999 - 4.62 1997 -14.07 1998 - 1.04

$61.19

Growth of $1: Portfolio ABCD vs. Portfolio A

(Equal Allocation vs. U.S. Stocks)

$35.51

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60

70

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YEAR ENDING

DO

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AR

S

ABCD (Equal Allocation) A (U.S. Stocks)

Investment Options• Stocks – Large, Mid, Small, Growth Value, International

• Bonds – Gov’t, Municipal, Corporate, High Yield, Short, Intermediate, Long

• Reits – real estate investment trusts

• ETFs – exchange traded funds

• Mutual Funds

• Commodities

Fairport Asset Management, LLC

Favorite Websites• http://finance.yahoo.com/

• http://www.investopedia.com/

• http://www.morningstar.com/

• www.capandcompass.com “Life after school explained” book.

Fairport Asset Management, LLC

Rebalancing

• The process of realigning the weightings of one's portfolio of assets.

• Important way to reduce risk.

• Allows for more consistent returns. Consistent Returns= increased compounding= increased wealth

Retirement Myths

1. You'll only need 70–80% of your pre-retirement income.

2. When you retire, you'll be in a lower tax bracket.

3. You can always just keep working.

4. The stock market will save you.

5. There's always Social Security.

Reality check: Spend less, save more

Fairport Asset Management, LLC

Save Now vs. Later• Individual #1

• Saves $275/month for 10yrs starting today.

• Investment earns 8%

• Ends up with $106,941

• Individual #2

• Saves $275 month for 10yrs but waits.

• Investment earns 8%

• Ends up with $49,534

Fairport Asset Management, LLC

Retirement Options

• 401k – 2006 max contribution limit of $15,000

• 401k Roth

• 403b – 2006 max contribution limit of $15,000

• Traditional IRA - $4000 max contribution

• Traditional Roth

• Defined Benefit Plans – Pension

• Annuities – no limit

Fairport Asset Management, LLC

Questions to ask before opening an IRA

• Does the account have an annual fee? • If there is an annual fee, is it waived at some threshold account

balance? • What are my investment choices at this financial institution for my

Roth IRA account?

• Are there any transfer or account closing penalties.

Fairport Asset Management, LLC

Questions to Ask Employer

• What retirement plans are available? and what are investment options?

• Is there any employer matching?

• What is the vesting period? • Do you offer a FLEX plan?

• How is the health insurance plan structured?

Fairport Asset Management, LLC

Now What • Start Saving for retirement through employer

plan.

• Develop a retirement game plan.

• Invest in a Roth or Traditional IRA.

• Consider purchasing Umbrella Insurance

Fairport Asset Management, LLC