Embed Size (px)
Citation preview
Market Charts Kit
Binder
Data on the images displayed have been altered and are for illustrative purposes only.
1972
*2009 values have been annualized
*
1976 1980 1984 1988 1992 1996 2000 2004 2008
Last 1 Year 5 Years 20 Years 37 Years
30%
25
–5
20%
10
15
0
5
Annual Income Returns
Total and Income Returns as of December 2009
0
10
20
15
5
REITs Domestic Bonds Domestic Stocks International Stocks Income Return
0.1%
6.4%4.0%
2.6%4.0%
5.1%
2.1%4.7% 3.2%
7.0% 6.2%
2.2% 2.3%
8.1%
7.8%3.2% 2.8%
–0.6%
11.2%
6.0%
9.8%11.1%
0.3%
8.0%9.6% 9.8%
4.7%5.6%
28.4%
9.1% 8.5% 8.6%
Retirement Income VehiclesJanuary 1972–December 2009
Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
HighestReturns
LowestReturns
2009
32.5%
28.1%
26.5%
14.0%
0.1%
–14.9%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
7.8% 44.6% 23.3% 32.9% 8.1% 37.6% 23.0% 33.4% 28.6% 29.8% 21.5% 22.8% 17.8% 60.7% 20.7% 14.0% 26.9% 11.6% 25.9%
6.2% 30.5% 8.1% 21.0% 3.9% 34.5% 17.6% 22.8% 20.3% 27.3% 5.9% 3.8% 1.6% 39.2% 18.4% 7.8% 16.2% 9.9% 1.6%
–3.1% 22.3% 7.6% 18.2% 3.1% 31.7% 10.3% 15.9% 13.1% 21.0% 0.6% 3.7% –6.5% 28.7% 12.0% 7.3% 15.8% 5.5% –20.7%
–6.8% 19.3% 6.0% 17.0% 1.8% 23.8% 6.4% 15.9% 12.2% 14.3% –3.6% –0.8% –13.3% 24.8% 10.9% 5.7% 12.9% 5.4% –36.7%
4.7%–21.6% 12.5% 3.5% 10.1% 1.3% 11.6% 5.2% 5.3% 4.9% 4.7% –9.1% –11.9% –15.7% 1.4% 8.5% 4.9% 4.8% –37.0%
–5.2%–23.2% 5.6% –11.8% 2.9% –7.8% 5.6% –0.9% 2.1% –7.3% –9.0% –14.0% –21.2% –22.1% 1.0% 1.2% 3.0% 1.2% –43.1%
Small Stocks Large Stocks Long-Term Government Bonds Treasury Bills International Stocks Diversified Portfolio
Asset-Class Winners and LosersAnnual asset-class returns from highest to lowest
Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
Asset Class Winners and Losers
Financial professionals are called on to answer tough questions in any market, but now, more than ever, communication is crucial.
Drawn from the most compelling Morningstar images, this practical collection of FINRA-reviewed laminated charts helps increase the power of one-on-one conversations, and re-establish confidence with clients. Evaluating topics such as retirement income, dangers of market timing, and keys to long-term investing, these charts help investors focus on their investment goals.
Key Features:15 laminated prints that include iconic capital markets images to help quickly convey complex investing concepts
Each chart includes detailed speaking notes that inspire and support discussions with your clients and prospects
FINRA reviewed charts give clients an objective understanding of their portfolios
New charts available in 2010: Retirement Income Vehicles Bond Performance and Diversification Benefits
Market Charts KitUse our most popular collection of images to communicate core investing concepts at work in your client’s portfolio.
Purchasing Information: Market Charts Kit $235
15 laminated prints (8.5”311”)One storage binder
Product available in March, 2010.
Call
1-877-345-9222 Visit www.morningstar.com/goto/MC
Begin 1926End 1930
19301934
19341938
19381942
19421946
19461950
19501954
19541958
19581962
19621966
19661970
19701974
19741978
19781982
19821986
19861990
19901994
19941998
19982002
20022006
1926 1936 1946 1956 20061996198619761966
300
100
0.50
1
0.50
0.25
0.75
0
–0.50
–0.25
vs. High-Yield Corp Bonds vs. Corporate Bonds vs. Long-Term Govt Bonds vs. Intermediate-Term Govt Bonds Correlation of stocks to bonds, 60-month rolling periods
Growth of $1
$1
10
$233
$121
$79$89
High-Yield Corp Bonds 6.7%Corporate Bonds 5.9Long-Term Govt Bonds 5.5Intermediate-Term Govt Bonds 5.4
Compound Annual Return
Bond Performance and Diversification BenefitsJanuary 1926–December 2009
Past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
Bond Performance and Diversification Benefits
1995 2000 2005
10,000
1,000
100
10
$1
0.10
$15,091
$3,246
$79
$20
$12
19901985198019751970196519601955195019451940193519301926
Small Stocks 12.5% Large Stocks 10.4Long-Term Govt Bonds 5.5Treasury Bills 3.7Inflation 3.0
Compound Annual Return
Gene
ral A
gree
men
t on
Tarif
fs a
nd T
rade
U.S.
Tre
asur
y-Fe
dera
lRe
serv
e Ac
cord
Secu
ritie
s Ex
chan
ge A
ct
Sput
nik
laun
ched
JFK
assa
ssin
ated
Tet o
ffen
sive
in V
ietn
am
Fed
targ
ets
mon
etar
y su
pply
Star
t of l
ow in
flatio
nary
per
iod
Stoc
k m
arke
t cra
sh
Gram
m-L
each
-Blil
ey A
ct
S Crud
e oi
l hits
hig
h of
$98
.18
epte
mbe
r 11t
h
Star
t of G
ulf W
ar
Arab
oil
emba
rgo
Glas
s-St
eaga
ll Ac
t
Stoc
k m
arke
t cra
sh
Pear
l Har
bor
May
Day
, the
der
egul
atio
nof
bro
kera
ge fe
es
Ibbotson SBBIStocks, Bonds, Bills, and Inflation 1926–2009
Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs or taxes. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Ibbotson SBBI 1926–2009
13% Return
12
11
10
9
10% Risk 11 12 13 14 15 16 17
Maximum Risk Portfolio100% StocksMaximum Risk Portfolio100% Stocks
Minimum Risk Portfolio25% Stocks, 75% Bonds
100% Bonds
50% Stocks, 50% Bonds
60% Stocks, 40% Bonds
80% Stocks, 20% Bonds
Stocks and Bonds: Risk Versus Return1970–2009
This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Stocks and Bonds: Risk Versus Return
125
100
75
50
25
0
–25
–50
150%
Small-Company Stocks
1-Year 5-Year 20-Year
Government Bonds
1-Year 5-Year 20-Year
Holding Periods
12.5%
Large-Company Stocks
10.4%
1-Year 5-Year 20-Year
Treasury Bills
3.7% Compound Annual Return
1-Year 5-Year 20-Year
5.5%
Reduction of Risk Over TimeRange of Returns 1926 –2009
Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
Reduction of Risk Over Time
50%
0
50%
0
50%
0
One-year returns
5-year annualized returns
15-year annualized returns
Periods with lossPeriods with gain
Each bar represents the average return for the preceding 5-year time period.
Each bar represents the average return for the preceding 15-year time period.
1926 1936 1946 1956 1966 1976 1986 1996 2009
72%
28%
87%
13%
100%
Risk of Stock Market Loss Over Time1926–2009
Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
Risk of Stock Market Loss Over Time
Jan–Dec 1969 Jan–Dec 1974 Jan–Dec 1979 Jan–Dec 1984 Jan–Dec 1989 Jan–Dec 1994 Jan–Dec 1999 Jan–Dec 2004
40%
30
20
10
75%
50
25
0
–25
–50
Large Growth Large Value
12-Month Rolling Returns
Performance Differential
Growth Versus Value StocksOne-year growth and value trends 1981–2009
Performance differential measures the outperformance of each asset class over one another using 12-month rolling returns. Each 12-month rolling return represents the annualized return for the preceding 12 months. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Growth Versus Value Stocks
100
10
$1
0.10
$54.98
$2.86
$0.55
$1.39
Stocks 5.0% Municipal Bonds 1.3Government Bonds 0.4Treasury Bills –0.7
Compound Annual Return
1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Sepa
rate
rate
s fo
r sin
gle
peop
le
and
mar
ried
coup
les
adop
ted
Min
imum
tax
impo
sed
at 1
0%of
sel
ecte
d pr
efer
ence
inco
me
Crud
e Oi
l Win
dfal
l Pro
fitTa
x Ac
t of 1
980
COBR
A en
acte
d
Top
mar
gina
l inc
ome
tax
rate
33%
and
real
ized
ca
pita
l gai
ns ta
xabl
e as
ord
inar
y in
com
e
Top
mar
gina
l inc
ome
tax
rate
35%
and
long
-ter
m c
apita
l gai
ns lo
wer
ed to
15%
Top
mar
gina
l inc
ome
tax
rate
25%
Govt
em
ploy
ees
no lo
nger
exem
pt fr
om fe
dera
l inc
ome
tax
Top
mar
gina
l inc
ome
tax
rate
rais
ed
to 9
2% d
urin
g Ko
rean
War
Empl
oyee
Ret
irem
ent I
ncom
e Se
curit
y Ac
t (ER
ISA)
ena
cted
Top
mar
gina
l inc
ome
tax
rate
50%
Top
mar
gina
l inc
ome
tax
rate
39.
6%
Long
-ter
m c
apita
l gai
ns
rate
low
ered
to 2
0%
Top
mar
gina
l inc
ome
tax
rate
ra
ised
to 9
4% d
urin
g W
WII
Top m
argi
nal i
ncom
e tax
rate
70%
Inve
stm
ent t
ax c
redi
t firs
t ena
cted
Fede
ral g
over
nmen
t sto
psis
suin
g ta
x-fr
ee b
onds
Stan
dard
ded
uctio
n ad
opte
d
Top
mar
gina
l rat
e lo
wer
ed
from
91%
to 7
7%
Ibbotson SBBI After Taxes and Inflation1926–2009
Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Ibbotson SBBI after Taxes and Inflation 1926–2009
30
20
10
–10
–20
–30
40% Return
1970
0
1975 1980 1985 1990 1995 2000 2005
Annual return minus best monthAnnual return
Market-Timing RiskThe effects of missing the best month of annual returns 1970 –2009
Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
Market-Timing Risk
100% Bonds100% Bonds 75%B | 25%S75%B | 25%S 50%B | 50%S50%B | 50%S 25%B | 75%S25%B | 75%S 100% Stocks100% Stocks
85% 97% 97% 94% 92%
81%
68%
54%
41%
83%
66%
47%
31%
83%
57%
31%
13%
73%
30%
6%
0%
0%
0%
33%
4%
4% Withdrawal Rate
5%
6%
7%
8%
Chance of meeting needs
Probability of Meeting Income NeedsVarious withdrawal rates and portfolio allocations over a 25-year retirement
Results may vary over time and each time the simulation is run. IMPORTANT: The projections or other information generated by Morningstar regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. No transaction costs or taxes are assumed. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Probability of Meeting Income Needs
7th
9th
11th
18th
19th
22nd
2nd
Hong Kong 41.2%Portugal 48.0%Norway 26.4%Norway 54.6%Sweden 65.4%Austria 17.2%Australia 1.8%Canada 5.4%Singapore 99.7%Greece 78.0%
3rd
Germany 35.6%Ireland 47.2%Denmark 26.0%Greece 46.2%Germany 64.2%Australia –0.3%Ireland –2.9%Denmark 3.7%Sweden 81.5%Belgium 67.7%
1stRank
2009
Finland 49.7%
2008
Spain 49.8%
2007
Canada 29.6%
2006
Austria 72.4%
2005
Greece 69.0%
2004
New Zealand 26.1%
2003
New Zealand 9.4%
2002
Switzerland 6.4%
2001
Finland 156.1%
2000
Finland 121.1%
5.5%
15.8%10.9%
4.9%
–22.1%
28.7%
–11.9%
–9.1%
21.0%
28.6%
Opportunities AbroadAnnual returns of top-performing developed global stock markets 2000–2009
Past performance is no guarantee of future results. Returns expressed in U.S. dollars. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. © 2010 Morningstar, Inc. All rights reserved.
Opportunities Abroad
6% Return
3
–3
–6
Daily returns for all 5,044 trading days
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
10
8
6
2
0
12% Return
4
Invested for all5,044 trading days
11.8%
10 best days missed
9.2%
20 best days missed
7.2%
30 best days missed
5.4%
40 best days missed
3.8%
50 best days missed
2.3%
The Cost of Market TimingRisk of missing the best days in the market 1990 –2009
Past performance is no guarantee of future results. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index.
The Cost of Market Timing
1,000
100
10
$1
0.10
$644.22
$33.48
$16.33
$6.43
$11.72
Stocks 8.2% Municipal Bonds 4.4Government Bonds 3.5Inflation 3.0Treasury Bills 2.3
Compound Annual Return
1926 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Sepa
rate
rate
s fo
r sin
gle
peop
le
and
mar
ried
coup
les
adop
ted
Top m
argi
nal i
ncom
e tax
rate
70%
Min
imum
tax
impo
sed
at 1
0%of
sel
ecte
d pr
efer
ence
inco
me
Crud
e Oi
l Win
dfal
l Pro
fitTa
x Ac
t of 1
980
COBR
A en
acte
d
Top
mar
gina
l inc
ome
tax
rate
33%
and
real
ized
ca
pita
l gai
ns ta
xabl
e as
ord
inar
y in
com
e
Top
mar
gina
l inc
ome
tax
rate
35%
and
long
-ter
m c
apita
l gai
ns lo
wer
ed to
15%
Top
mar
gina
l inc
ome
tax
rate
25%
Top
mar
gina
l inc
ome
tax
rate
rais
ed
to 9
2% d
urin
g Ko
rean
War
Empl
oyee
Ret
irem
ent I
ncom
e Se
curit
y Ac
t (ER
ISA)
ena
cted
Top
mar
gina
l rat
e lo
wer
ed
from
91%
to 7
7%
Inve
stm
ent t
ax c
redi
t firs
t ena
cted
Top
mar
gina
l inc
ome
tax
rate
50%
Top
mar
gina
l inc
ome
tax
rate
39.
6%
Long
-ter
m c
apita
l gai
ns
rate
low
ered
to 2
0%
Govt
em
ploy
ees
no lo
nger
exem
pt fr
om fe
dera
l inc
ome
tax
Fede
ral g
over
nmen
t sto
psis
suin
g ta
x-fr
ee b
onds
Stan
dard
ded
uctio
n ad
opte
d
Top
mar
gina
l inc
ome
tax
rate
ra
ised
to 9
4% d
urin
g W
WII
Ibbotson SBBI After Taxes1926–2009
Hypothetical value of $1 invested at the beginning of 1926. Assumes reinvestment of income and no transaction costs. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Ibbotson SBBI After Taxes 1926–2009
$500,000
300,000
400,000
200,000
100,000
1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Withdrawal Rate: 9% 8% 7% 6% 5%
Potential Shortfall: The Risk of High Withdrawal RatesAnnual inflation-adjusted withdrawal as a % of initial portfolio wealth
Portfolio: 50% Large Stocks/50% Intermediate-Term Bonds. This data is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.
Potential Shortfall: The Risk of High Withdrawal Rates
