MARCH 21, 2019   |   VIEW AS WEBPAGE
Presented by Land Rover Des Moines
Land Rover Des Moines

Nora Everett, president of retirement and income solutions at Principal Financial Group Inc. and chairwoman of Principal Funds.

Take Comfort in a Well-Balanced Portfolio

A friend’s financial adviser was mildly chastising a client some years back over the lack of diversity in his portfolio. Fully 50 percent of the account consisted of just one stock.

"I know. I’m sorry. But it’s Oracle," the client said, noting that the software giant had recently completed a 60-fold run-up in its share price. (Things have slowed; it has merely quintupled in price since 2005.)

Not all of us are shrewd or lucky enough to latch onto such rising stars. But we should be wise enough with our money to see that there are many lesser possibilities, and that we can take advantage of them if we properly diversify our resources among those opportunities.

Nora Everett is bringing this reminder (or in some cases, news flash) to investors near and far. She should know about this topic, as she is president of retirement and income solutions at Principal Financial Group Inc., and is chairwoman of Principal Funds, and sees it as a duty to promote a balanced investment portfolio.

Getting there is relatively easy. Mutual fund ratings firm Morningstar breaks the investment world down into 10 basic baskets of stocks: foreign, high-yield bonds, investment-grade bonds, large growth stocks, large value stocks, mid-cap stocks, REITs (real estate investment trusts), small growth, small value and diversified. These categories don’t rise and fall in tandem with one another. Bonds will have a great year, for instance, while stocks get crushed. Or foreign stocks will perform well when U.S. equities are down.

Or sometimes everybody loses. In such cases the hope is that you lose the least.

In 2018, for instance, investment-grade bonds led the way with a positive return of 0.1 percent in a rather pitiable year for the markets overall. Large growth stocks took top honors in 2017, rising 30 percent in a markedly better investment year, and small value stocks topped the chart in 2016, up 31.7 percent.

Over a 20-year period ending in 2018, Everett’s numbers showed that REITs offered the best annual average return, of 9.65 percent. In fact, they were the best performer more times than any other category. Mid-cap stocks were in second place. The lowest return over that a time came from investment-grade bonds, while foreign stocks came in ninth.

The highest return of all categories, all years, went to high-yield bonds, in 2009, with an impressive 58.7 percent return. And the lowest for the entire period was foreign stocks, which fell 41.8 percent during 2008, a horrible year all around.

Interestingly, a diversified portfolio came in fourth best, performance-wise. It pretty much performed in the middle of the pack during each of the 20 years that were measured.

You can break down asset allocation to subgroups, such as mid-cap growth versus value, or apartment versus hotel REITs. And you obviously can strike out on your own with individual stock and bond selections, as opposed to mutual funds or ETFs. The beauty of diversification is that it works for big funds of individual purchases and that it works for big and small investor alike.

"Asset allocation is relevant whether it’s $1 million or $50,000" in your portfolio, says Everett.
dsm Magazine dsm Magazine

Legacy Bridge

Changes in 401(k) Regulations Boost Participation

Key changes to the way 401(k) plans and their underlying investments operate should go a long way toward boosting your retirement nest egg.

In days of yore, employees had to affirmatively state that they wanted to participate in a workplace 401(k) plan. No affirmation = no money into these tax-deferred accounts. Thanks to regulatory changes, workers at many companies now have to affirmatively opt out of their 401(k). They’re enrolled from the get-go.

"Auto-enrollment is really powerful in helping [reach your income] replacement level," said Nora Everett,president of retirement and income solutions at Principal Financial Group Inc. "Very, very few people opt out."

Another boost has come from life cycle, or age-based, mutual funds. Many plan participants are wary of choosing where to put their money. With these funds, you choose one that fits your expected retirement date, and it then finds investments that adjust their risk profile depending on how long it is until you cash them in.

At Principal, their LifeTime Funds move in 10-year increments. Their 2040 fund, for example, will own funds that buy stocks that are a little higher up the risk scale, and not contain so much in the way of bonds. As 2040 approaches, more bonds will come into that fund and stocks will wind down the risk scale.

dsm Magazine dsm Magazine

American Retirement Education
801 Chophouse

Big Investors Not Impressed by Wealth-Management Apps

Mobile apps are now consumers' preferred way to engage with many of the companies and services they use—but not wealth management customers.

Utilization of wealth management apps is among the lowest of all industries, according to a J.D. Power study evaluating apps from 15 of the largest brokerage firms. Only about a quarter of clients use their firm's mobile apps, whether they are self-directed investors or in a full-service relationship with an adviser.

That's significantly less than the more than 50 percent of bank customers who use their bank's mobile app, and the more than a third of credit card customers who use their credit card company's app. > READ FULL STORY

Is Your Portfolio Tailored to Fit Your Needs, or Just ‘Off-The-Rack’?
SPONSORED BY FOSTER GROUP, Ryan Lamoureux, Investment Analyst

Have you ever wondered how your portfolio is different from that of the market? Learn how slight adjustments to the market portfolio may benefit your portfolio over time. > LEARN MORE

dsmWealth's Suggested Reading

dsmWealth is published on the first and third Thursday of each month and updated on

What would you like to see here? Contact us at

You can
sign up here to get dsmWealth delivered to your inbox.

Denton Homes
R & R

Business Publications Corporation Inc.

Contact the publisher:
Business Record membership info:

Copyright © BPC 2018, All rights reserved.
Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited.

Email Marketing by ActiveCampaign