Actions You Can Take In Volatile Market Linkedin

Actions You Can Take in a Volatile Market
Now more than ever, you need a plan

Benjamin Glover

Financial planning services and investments offered through Ameriprise Financial
Services, Inc. Member FINRA and SIPC.
© 2008 Ameriprise Financial, Inc. All rights reserved.

Today’s agenda

How we arrived where we are today
Putting today’s markets in historical perspective
Fundamental investment strategies to help you deal with
and even find opportunity in volatile markets
Managing emotions as part of the investment process
Steps to consider taking now

Ameriprise Financial

What we learned in our 110-year history
More people come to Ameriprise Financial for
financial planning than any other company*
Ameriprise is America’s largest financial
planning company*

* Based on the number of financial plans annually disclosed in Form ADV, Part 1A, Item 5, available at adviserinfo.sec.gov as of December 31, 2007, and the
number of CFP® professionals documented by the Certified Financial Planner Board of Standards, Inc.

What’s been driving recent
market volatility?

An oversupply of lending which drove up home values and
resulted in the eventual collapse of the U.S. housing market
Repercussions from the subprime mortgage crisis which
spread to global capital markets
The residual impact of the current credit crisis and the
follow-on effect it has had on the global economy

I read the news today

1987-1991
> Real estate prices collapse
> Largest one-day loss in the Dow
Jones Industrial Average
> Sub-prime bond market collapses,
real estate continues to decline, credit
dries up, savings institutions weaken
> Government bailout is enacted.
Billions of taxpayer dollars spent to
deal with failing lending institutions
> Recession sets in leading to
another stock market decline

Crisis events and subsequent
market performance

Source: Ned Davis Research
Past performance is not a guarantee of future results.

A familiar pattern

Dow Jones Industrial Average (Monthly)

Copyright © 2008 Thechartstore.com
Past performance is not a guarantee of future results. The Dow Jones Industrial Average is an unmanaged index that follows the returns of 30 well-established
American companies, and is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in the
market prices, but excludes brokerage commissions and other fees. It is not possible to invest directly in an index.

The ―flaw‖ of averages

S&P 500 Annual Returns 1926-2007

60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
1926 1940 1960 1980 2000

Ibbotson. Calendar year total returns of S&P 500 Index assuming reinvestment of all dividends and capital gains. The S&P 500 Index is an unmanaged index
commonly used to measure stock performance. It is not possible to invest directly in an index. Past performance is not a guarantee of future results.

Measuring volatility

44%
S&P 500 stock index 1976-2007:
Average return is about 14%
Standard deviation (volatility) has 29%
been about 15%
Range of returns is about 44% to -17%
14%

-2%

-17%
The S&P 500 Index is an unmanaged index commonly used to measure stock performance. It is not possible to invest directly in an index. Past performance is not a
guarantee of future results.

The stock market has delivered over
the long term

From 1966 through 2007, the S&P 500 has returned an average
of 10.2% per year
Returns in a given calendar year ranged from -26% to +37%

Below -20% -20% – -10% -10% – 0% 0% – +10% +10% – +20% Over +20%
2002 2001 2000 2007 2006 2003 1983
1974 1973 1990 2005 2004 1999 1982
1966 1981 1994 1988 1998 1980
1977 1993 1986 1997 1975
1969 1992 1979 1996 1967
1987 1976 1995
1984 1972 1991
1978 1971 1989
1970 1968 1985

Source: Ned Davis Research.
Standard & Poor’s 500 Index. It is not possible to invest directly in an index. Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged list of common
stocks which includes 500 large companies, and is frequently used as a general measure of market performance. The index reflects reinvestment of all
distributions and changes in the market prices, but excludes brokerage commissions or other fees.
Past performance is not a guarantee of future results.

Historical range of returns of S&P 500:
1970-2008*

61.18

29.63 19.21 18.26

9.94
-3.77 2.88

-38.94
1 year 5 years 10 years 20 years

The Standard & Poor’s 500 Market Index (S&P 500) is an unmanaged list of common stocks frequently used as a measure of market performance. The index reflects
reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. The highest return is represented by the top of
each bar and the lowest annual return is shown at the bottom. The rolling 5-,10- and 20-year ranges are also shown. Over time, lower performing years will be offset
by higher performing years and vice versa. Therefore the range of the historical returns over the entire period is narrower than the range of returns in any single year.
Returns over 1 year in length are annualized. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Returns by decade

# of years # of years # of years Average annual
Decade down up 0–18% up 18%+ return for decade
1920s
1920s 3 2 5
5 8.77%
8.77%
1930s
1930s 6 0 4
4 -0.05%
-0.05%
1940s
1940s 3 2 5
5 9.17%
9.17%
1950s
1950s 2 2 6
6 19.35%
19.35%
1960s
1960s 3 4 3
3 7.81%
7.81%
1970s
1970s 3 3 4
4 5.86%
5.86%
1980s
1980s 1 3 6
6 17.55%
17.55%
1990s
1990s 1 3 6
6 18.20%
18.20%
Average
Average 2.75
2.75 2.375
2.375 4.875
4.875 10.83%
10.83%

Source: Ibbotson. S&P 500 Index returns assume reinvestment of all dividends and capital gains. The S&P 500 Index is an unmanaged index commonly used to
measure stock market performance. It is not possible to invest directly in an index. Past performance is not a guarantee of future results.

Where we stand in the current decade

30 28. 37%
25

20
15.79%
15
10.87%
10
4.91% 5.49%
5
? ?
0

-5

-10 -9.10%
-15
-11.88%

-20
-22.9%
-25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: S&P Fact Book. Annual Returns of S&P 500 Index, 2000-2007, assuming reinvestment of dividends. The average annual total return for the period 12/31/99
to 12/31/07 was 3%. The S&P 500 Index is an unmanaged index commonly used to measure stock market performance. It is not possible to invest directly in an
index. Past performance is not a guarantee of future results.

Comparing this decade to others

Annualized performance of the S&P 500

19.35%
20 17.55% 18.20%

15

10 8.77% 9.17%
7.81%
5.86%
5

1.66%
0
-0.05%
20s 30s 40s 50s 60s 70s 80s 90s 00s
-5 (1925 – 1929) (2000 – 2007)

Source: Ibbotson. S&P 500 Index returns assume reinvestment of all dividends and capital gains. The S&P 500 Index is an unmanaged index commonly used to
measure stock market performance. It is not possible to invest directly in an index. Past performance is not a guarantee of future results.

Markets don’t move in a linear fashion

Stocks tend to bounce back after five-year periods of
negative performance
25
22.47%
20 17.87%
15 14.29% 14.76% 14.10% 12.83%
10.67% 10.91%
10

5

0
-0.20% -0.59% -.057%
-2.36% -2.29%
-5
-5.10%
-10 -7.51%
-9.93%
-11.24%
-15 -12.47%
1927– 1932– 1929– 1933– 1929– 1934– 1930– 1935– 1937– 1942– 1970– 1975– 1973– 1978– 1998– 2003– 1999– 2004– 2000–
1931 1936 1933 1937 1933 1938 1934 1939 1941 1946 1974 1979 1977 1982 2002 2007 2003 2008 2004

Source: Ibbotson. Losses are based on Large-Capitalization U.S. Stocks, based on annualized performance of the Standard & Poor's 500® Index through the
five calendar-year periods ending on the dates shown. Returns assume reinvestment of all dividends and capital gains. It is not possible to invest directly in an
index. Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged list of common stocks which includes 500 large companies, and is frequently used as a
general measure of market performance. The index reflects reinvestment of all distributions and changes in the market prices, but excludes brokerage
commissions or other fees. Past performance is not a guarantee of future results.

Long-term investing strategies

Diversify to manage business, market, and interest rate risk
Rebalance your portfolio if it is appropriate
Consider the current and future tax ramifications of
your actions
Dollar-cost average to keep your investment strategy
on track
Manage your emotions by following a disciplined plan based
on solid fundamentals, not emotion

2000 2001 2002 2003 2004 2005 2006 2007* n Large Cap Growth: Russell 1000® Growth Index
n Large Cap Value: Russell 1000® Value Index
REAL SMALL CAP SMALL CAP REAL INT’L REAL LARGE CAP
ESTATE VALUE
BONDS
GROWTH ESTATE STOCKS ESTATE GROWTH n Int’l Stocks: MSCI EAFE Index
10.25% n Small Cap Value: Russell 2000® Value Index
31.04% 14.02% 48.54% 33.16% 14.02% 35.97% 11.81%
n Small Cap Growth: Russell 2000® Growth Index
n Mid Cap Stocks: Russell Mid Cap® Index
SMALL CAP REAL REAL SMALL CAP SMALL CAP REAL INT’L INT’L
VALUE ESTATE ESTATE VALUE VALUE ESTATE STOCKS STOCKS n High Yield Bonds: Lehman Brothers High Yield Bond
22.83% 12.35% 3.58% 46.03% 22.25% 13.82% 26.86% 11.63% Index
n Bonds: Lehman Brothers Aggregate Bond Index
n Real Estate: Wilshire REIT Index
HIGH YIELD MID CAP INT’L MID CAP SMALL CAP SMALL CAP
BONDS BONDS
BONDS STOCKS STOCKS STOCKS VALUE GROWTH
n Diversified Portfolio: Hypothetical portfolio with quarterly
11.63% 8.44% rebalancing and an equal weighting in each of the
-1.41% 40.06% 20.70% 12.65% 23.48% 7.05%
indices listed
*Data as of 12/31/07. The table above shows how various asset
MID CAP HIGH YIELD SMALL CAP INT’L MID CAP DIVERSIFIED LARGE CAP classes and a hypothetical diversified portfolio based upon equal
PORTFOLIO
BONDS
STOCKS BONDS VALUE STOCKS STOCKS VALUE weighting of each of the asset classes have performed from 2000–
7.46% 6.97%
8.25% 5.28% -11.43% 39.17% 20.22% 22.25% 2007. Sources: Lipper, Inc., Thomson/InvestmentView and Wilshire
REIT Index. Past performance does not guarantee future results.
Diversification helps you spread risk throughout your portfolio, so
LARGE CAP DIVERSIFIED DIVERSIFIED REAL DIVERSIFIED LARGE CAP DIVERSIFIED MID CAP investments that do poorly may be balanced by others that do
VALUE PORTFOLIO PORTFOLIO ESTATE PORTFOLIO VALUE PORTFOLIO STOCKS relatively better. Diversification and asset allocation do not
-1.87% -11.74% 16.63% 17.97% guarantee overall portfolio profit and do not protect against loss. The
7.01% 36.18% 7.05% 5.60%
above performance is not intended to represent any specific
investment. It is not possible to invest directly in any of the
unmanaged indices shown above. All performance shown assumes
DIVERSIFIED LARGE CAP LARGE CAP DIVERSIFIED LARGE CAP LARGE CAP MID CAP DIVERSIFIED reinvestment of interest and does not include the expenses of
PORTFOLIO VALUE VALUE PORTFOLIO VALUE GROWTH STOCKS PORTFOLIO managing a mutual fund. Every investor has unique goals and
1.14% -5.59% -15.52% 33.58% 16.49% 5.26% 15.26% 2.19% tolerance for risk. Russell 1000® Growth Index measures the
performance of the 1,000 largest companies in the Russell 3000
Index with higher price-to-book ratios and higher forecasted growth
HIGH YIELD MID CAP INT’L LARGE CAP SMALL CAP SMALL CAP SMALL CAP HIGH YIELD values. Russell 1000® Value Index measures the performance of the
BONDS STOCKS STOCKS VALUE GROWTH VALUE GROWTH BONDS 1,000 largest companies in the Russell 3000 Index with lower price-
-5.86% -5.62% -15.66% 30.03% 14.31% 4.71% 13.35% 1.87% to-book ratios and lower forecasted growth values. MSCI EAFE
Index is designed to measure the performance of the developed
stock markets of Europe, Australia and the Far East, weighted by
capitalization. Russell 2000® Value Index contains those Russell
INT’L SMALL CAP MID CAP LARGE CAP HIGH YIELD SMALL CAP HIGH YIELD LARGE CAP
2000 securities with lower price-to-book ratios. Russell 2000®
STOCKS GROWTH STOCKS GROWTH BONDS GROWTH BONDS VALUE Growth Index contains those Russell 2000 securities with higher
-13.96% -9.23% -16.19% 29.75% 11.13% 4.15% 11.85% -0.17% price-to-book ratios. Russell Midcap® Index consists of the smallest
800 companies in the Russell 1000 Index, as ranked by total market
capitalization. Lehman Brothers High Yield Bond Index covers the
LARGE CAP LARGE CAP LARGE CAP HIGH YIELD LARGE CAP HIGH YIELD LARGE CAP SMALL CAP universe of fixed rate, non-investment grade debt. The Index
GROWTH GROWTH GROWTH BONDS GROWTH BONDS GROWTH VALUE includes both corporate and noncorporate sectors. Lehman Brothers
-22.42% –20.42% -27.88% 28.97% 6.30% 2.74% 9.07% -9.78% Aggregate Bond Index is composed of corporate, U.S. Government,
mortgage-backed and Yankee bonds with an average maturity of
approximately 10 years. Wilshire REIT Index is an unmanaged
SMALL CAP INT’L SMALL CAP REAL group of publicly-traded real estate investment trusts. Diversified
BONDS BONDS BONDS BONDS Portfolio assumes quarterly rebalancing and an equal weighting in
GROWTH STOCKS GROWTH ESTATE
4.10% 4.34% 2.43% 4.33% each of the listed indices. This is for illustrative purposes only and
-22.43% -21.21% -30.26% -17.55% does not reflect the performance of any specific investment.

Historic volatility by standard deviation

Stocks
44% Bonds
23%

29%
16%

S&P 500 Stock Index Lehman Aggregate
1976-2007 14% 9% Bond Index 1976-2007

2%
-2%
-6%
-17%

Past performance is not a guarantee of future results. Lehman Brothers Aggregate Bond Index, an unmanaged index, is made up of a representative list of
government, corporate, asset-backed and mortgage-backed securities. The index is frequently used as a general measure of bond market performance. Standard &
Poor's 500 Index (S&P 500 Index), an unmanaged list of common stocks, is frequently used as a general measure of market performance. The index reflects
reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. You can not invest directly in an index.

Diversification options

Asset classes (stocks, bonds, cash, real estate, etc.)
Investment products (e.g. mutual funds, annuities, ETFs)
Tax characteristics (taxable, tax-deferred, tax-free)

Diversification does not guarantee overall portfolio profit or protect against loss in declining markets.

Expected risk and return in any
single year

50% stocks/ 65% stocks/
50% bonds 35% bonds On occasion returns may occur
above this point
25.5% 31.2%
Some of the time returns may
fall into this range
16.6% 19.8%

Most of the time returns may
7.7% 8.4% fall into this range

-1.2% -3%
Some of the time returns may fall
into this range
-10.1% -14.4%
On occasion returns may occur
below this point

This hypothetical example is provided for illustrative purposes only. It is not intended to represent the performance of a specific investment or investment strategy.
Investment products involve risks including possible loss of principal and fluctuation in value.

Diversification can temper
market volatility

Performance of Stocks, Bonds and 50/50 Mix 1988 to 2007
50%

40%

30%

20%

10%

0%

-10%
1988 1998 2007
-20%

-30%
S&P 500 Index Lehman Brothers Aggregate Bond Index 50/50 Mix

Past performance does not guarantee future results. These examples do not reflect sales charges, taxes or other costs associated with investing. Lehman
Brothers Aggregate Bond Index, an unmanaged index, is made up of a representative list of government, corporate, asset-backed and mortgage-backed
securities. The index is frequently used as a general measure of bond market performance. Standard & Poor's 500 Index (S&P 500 Index), an unmanaged list
of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market
prices, but excludes brokerage commissions or other fees. You can not invest directly in an index.

Rebalancing can keep you on plan

Initial allocation One year later Rebalance back

50% 50% 60% 40% 50% 50%
Stocks Bonds Stocks Bonds Stocks Bonds

Dollar-cost averaging – price rises

$25

$20

$15

$10

$5

$0
1 2 3 4 5 6

Average price: $15.00
Average cost: $14.19
Invested amount: $6,000.00
Ending value: $8,456.40

Dollar-cost averaging does not guarantee a profit or protect against losses in a declining market. Investors should consider their ability to continue investing
during periods of low markets. This illustration is hypothetical and is not a forecast or guarantee of specific investment results.

Dollar-cost averaging – market down,
then recovers

$25

$20

$15

$10

$5

$0
1 2 3 4 5 6

Average cost: $13.85


Dollar-cost averaging – market down,
partial rebound

$25

$20

$15

$10

$5

$0
1 2 3 4 5 6

Average cost: $9.73


Three different markets —
three positive results

Total invested – $6,000 in monthly $1,000 increments

$10,000
$8,667
$8,456

$7,500

$6,167

$5,000
Market goes up Market down: Market down:
full recovery partial recovery


Understanding emotional investing

Euphoria Point of maximum financial risk

Thrill Anxiety
―Wow, I am
Excitement making money. Denial
I feel good ―This is just a temporary setback.‖
about this
Optimism investment.‖ Fear
Optimism
Desperation
Panic Relief
Capitulation
―I think I need to sell.‖ Hope
Despondency ―Things may be turning around.‖

Depression

Point of maximum financial opportunity

Source: Radarwire.com. A product of Simon Economic Systems, Ltd.

The average equity investor lags
the market

Equity market returns v. equity mutual fund investors’ returns

16%

11.8%
12%

8%

4.3%
4% 3.0%

0%
S&P 500 Index Average equity Inflation
Fund investor

Source: Dalbar, Inc., 2007 Quantitative Analysis of Investor Behavior for the period (1986 - 2006). Benchmark returns represented by total returns of the S&P 500.
The Standard & Poor’s 500 Stock Market Index (S&P 500) is an unmanaged list of common stocks frequently used as a measure of market performance. You can
not invest directly in an index.

How emotion can put investors on
the wrong path

Net inflows to equity mutual funds and subsequent
5-year returns

Net flows 5-year Avg.
Year
(in $ billions) Annual Return

1988 -$14.9 15.88%

2000 +$309.4 -2.30%

2002 -$27.6 6.19%

Source: Net inflows from Investment Company Institute. 5-year AATR represents total return of S&P 500 for five year period beginning in the year listed.
No taxes or fees are assumed. It is not possible to invest directly in the index.

Benefits of a personalized financial plan

Focuses on your goals, not short-term market conditions
Assesses your risk tolerance
Employs time-tested disciplines to dampen market
volatility, such as rebalancing, dollar-cost averaging and opportunity
purchases
Takes taxes into consideration
Helps you neutralize the inclination to make emotional investment
decisions
Provides for review and rebalancing on a regular basis
A financial plan can help you feel more on track during
market turmoil*
*The Financial Planning Association® (FPA®) and Ameriprise® Value of Financial Planning Study, was conducted by Harris Interactive in June/July, 2008
among 3,022 adults. While market volatility was significant during the study period, subsequent financial developments, which may have affected
attitudes and behaviors, had not yet occurred. No estimates of theoretical sampling error can be calculated; a full methodology is available.

Saving and Building

Market volatility may be a new
experience for you
Your portfolio may be heavily
weighted in equities
You may feel tempted to sit on the
sidelines for awhile until things
settle down

Smart choices in uncertain times

Stay invested so you don’t miss out on the upside
Dollar-cost average through your workplace retirement plan
Diversify your portfolio
Have a cash reserve

Missing the best days

S&P 500 Index 1977 - 2007

All 7,571 Trading Days 12.90%

Miss the Best 10 Days 10.88%


0% 5% 10% 15%

For illustrative purposes. The index reflects reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other
fees. The chart shows the S&P 500 total return. Dividends are reinvested. It is not possible to invest directly in an index. Source: Ned Davis Research, Inc.

The benefits of diversification

Initial investment: $10,000

12%

6%
8%

4%
8%

LOSE

Ben Kent
Hypothetical example. Rate of return is for illustration purposes only and is not meant to represent any specific investment. Yields are hypothetical compounded
rates of return. The actual value and returns on most investments will fluctuate. It does not take into account any federal or state taxes that may apply.
Diversification and asset allocation help spread risk throughout your portfolio, so that investments that do poorly may be balanced by others that do relatively better.
Diversification and asset allocation do not guarantee overall portfolio profit or protect against loss in declining markets.

The benefits of diversification

25 years later, Kent has earned $23,367 more

12% $42,500
$66,286
6%
$42,919

8% $17,121

4% $6,665

Ben Kent

Hypothetical example. Rate of return is for illustration purposes only and is not meant to represent any specific investment. Yields are hypothetical compounded
rates of return. The actual value and returns on most investments will fluctuate. It does not take into account any federal or state taxes that may apply.

*The Financial Planning Association® (FPA®) and Ameriprise® Value of Financial Planning Study, was conducted by Harris Interactive in June/July, 2008 among
3,022 adults. While market volatility was significant during the study period, subsequent financial developments, which may have affected attitudes and
behaviors, had not yet occurred. No estimates of theoretical sampling error can be calculated; a full methodology is available.

Preparing and protecting

You’ve experienced market
volatility before
Though time is still your ally,
retirement is closer so you have
less time to recover
You feel challenged to protect what
you have and grow your wealth

Smart moves in uncertain times

Rebalance your portfolio
Re-assess your risk tolerance
Reduce portfolio volatility
Raise cash to fill up reserves
Plan for five key risks in retirement and your
withdrawal strategy
Be flexible

Five key risks your retirement plan
should address

Market volatility
Longevity
Tax risks
Health care
Unexpected events

The Ameriprise Financial Retirement
Income Framework

Long-Term
Assets
Sources of Contingent
Income Cash Flows

Short-Term
Assets
Cash Hub
Ameriprise ONE®
Financial Account

Paycheck
Needs Dreams Legacy

Ameriprise Bank, FSB, member FDIC, provides certain deposit and lending products and services for Ameriprise Financial Services, Inc. Ameriprise Bank, FSB
products are FDIC-insured to at least $250,000 per depositor. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not
deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. The
Ameriprise ONE® Financial Account is a brokerage account with cash management features. Investments, brokerage and investment advisory services are made
available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.

Determining a safe rate of withdrawal

Portfolio of 50% stocks/50% intermediate-term bonds
$1,600,000
An individual who began taking inflation-adjusted withdrawals
$1,400,000 of 5% at age 65 in 1972 would have seen their portfolio last
until approximately 1995 at age 88.
$1,200,000

$1,000,000
Withdrawal Rates
$800,000
9%
$600,000 8%
7%
$400,000
6%
$200,000 5%
4%
$0

1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

For illustrative purposes only. Ameriprise Financial cannot guarantee financial results.
Source: Ibbotson Presentation Materials, © 2005 Ibbotson Associates, Inc. All rights reserved. Used with permission. Each hypothetical portfolio has an initial
starting value of $500,000. It is assumed that a person retires on December 31, 1972, and withdraws an inflation-adjusted percentage of the initial portfolio wealth
($500,000) each year beginning in 1973. Each monthly withdrawal is adjusted for inflation. Each portfolio is rebalanced monthly. Government bonds are guaranteed
by the full faith and credit of the United States government as to the timely payment of principal and interest, while stocks are not guaranteed and have been more
volatile than the other asset classes. Sources of information:
Stocks: Standard & Poor’s 500®, which is an unmanaged group of securities and is considered to be representative of the stock market in general; bonds: five-year
U.S. Government Bond; inflation: Consumer Price Index.

Accessing and preserving
your money

Your retirement security is
challenged by market volatility
Portfolio losses can leave a lasting
mark in retirement
You might think that stocks are no
longer appropriate for your portfolio

Smart moves in uncertain times

Know your risk tolerance
Be realistic about your withdrawals
Understand the impact of volatile markets
Maintain a sufficient cash reserve
Plan for the unexpected
Be flexible

The impact of volatility on income portfolios

Beginning value $100,000

Sarah starts retirement Bill starts retirement
End value
Annual End value w/$5,000 Annual
Annual End value w/$5,000
Year Year w/$5,000
return withdrawals* return
return withdrawals*
withdrawals*

1 20% $114,000 1 -20% $76,000
2 6% $115,540 2 -6% $66,740
3 0% $110,540 3 0% $61,740
4 -6% $99,208 4 6% $60,144
5 -20% $75,366 5 20% $66,173

Distributions occur at the beginning of each year. This illustration is hypothetical and is not meant to represent any specific investment.

Chances of success based
on withdrawal rate

100% Conservative
Moderate Conservative
Moderate
75% Moderate Aggressive
Aggressive
Probability of
Success 50%

25%

0%
3% 4% 5% 6% 7% 8% 9%

Withdrawal Rate

Indices: cash—30-day T bills
Bonds—US Intermediate Govt., plus Median Premium of LEHB Agg Index to 1976, then LEHB Agg Index
Stocks—CRSP NY/AM/NM 1-10 TR

Chances of success based
on withdrawal rate

Annual Withdrawal Rate

Portfolio Composition
3% 4% 5% 6% 7% 8% 9%
Cash/Bonds/Equities

Conservative: 20/45/35 99% 84% 48% 16% 0% 0% 0%
Chance of
Mod. Cons.:15/35/50 99% 87% 61% 29% 10% 0% 0% Success
(liquidity
Moderate: 10/25/65 99% 88% 68% 40% 19% 7% 0% through
retirement)

Mod. Agg.: 10/15/75 99% 88% 70% 46% 25% 11% 0%

Aggressive: 10/0/90 98% 88% 73% 52% 32% 18% 0%


Six steps to consider taking now

1. Diversify, diversify, diversify
2. Rebalance or review your asset allocation
3. Dollar-cost average
4. Avoid market timing, but prepare for opportunities
5. Don’t let your emotions affect your financial future
6. Get or review your financial plan

Let’s get started.

[Benjamin Glover 919-227-3170

Financial planning services and investments offered through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2008 Ameriprise Financial, Inc. All rights reserved.

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