Proper financial planning requires that the investor consider all aspects of his/her financial life. Assessment of goals and risk tolerance are essential as first steps in this process. The following questions are suggested as a way to begin.

GOALS and RISKS

A. How would you describe your goals for your assets?

B. Have you made provisions for an emergency fund, life insurance (if appropriate), a will, and a testamentary trust (if appropriate)?

C. How would you describe your risk tolerance? This sliding scale may help.

                                0        1        2        3        4        5

0: Will accept no risk: Bank CD's, Govt. bonds and money-market funds only.

1: Small risk: Recommendation: Field Long-Term System, no more than 50% of assets, balance same as #0.

2: Some risk tolerance: Long-Term System, using up to 100% of equity allocation or Field Hybrid System, no more than 50% of assets.

3. Moderate risk: Field Hybrid System, using up to 100% of equity allocation.

4. Significant risk tolerance: Field Short-Term System with short sales and margin enabled (not recommended for the average investor).

5. High risk tolerance: Same as #4 plus use of derivatives (options) in Short-Term System (we do not accept such accounts for management).

Long-Term System is BUY when BULL market declared and SELL when BEAR market declared.

Short-Term System is BUY when S&P500 and 5 day moving average of  On-Balance Volume (5DMA of OBV) both turn up and SELL when they both turn down, provided the 5DMA is beyond a threshold value. There are also other rules for the System (please review Glossary for additional details).

Hybrid System is: use Short-Term System in a BULL market and use Long-Term System in a BEAR market.

Asset Allocation

Many Financial Planners use formulas based on a person's age (or a couples ages) to determine what percentages of their assets should be in stocks, bonds and cash. Some use 100 minus a person's age as the percentage that may be put into stocks, as for a 60 year old, 100-60=40, so 40% may be in stocks. The balance may be, say, 10% in cash and 50% in bonds. I have serious issue with the bond part, since bonds are recently at near record low interest rates, and the future very likely will bring rising interest rates, with concomitantly lower bond prices and loss of your principal if you do not hold the bonds to maturity. With that in mind, I would suggest the bond portion should be in bond mutual funds investing in 3-5 year maturities. These are presently yielding only about 3%. Also, traditional financial planning is based on a buy-and-hold strategy, which has by now been thoroughly discredited in favor of the Long-Term System or other plan (see Table 1 on Long-Term Investors page for a comparison between our Long-Term System and Buy-and-Hold).

CNN has a useful questionnaire and allocation calculator that one may use to get an idea of an asset allocation for themselves: http://cgi.money.cnn.com/tools/assetallocwizard/assetallocwizard.html.

We recommend these tools as only a starting point because our Systems are more active, more efficacious and allow a greater annual withdrawal than other plans. Our Hybrid System, which has the greatest return (an historical 17.7% per year), should allow greater than the traditional 4 to 6% withdrawal rate. Not that one can take a 17% withdrawal safely (if you were 100% in stocks); but perhaps one can withdraw the gain for the year if desired, prudently not to exceed, say, 9% to allow for advisory fees, commissions, inflation, and slippage (please see Glossary for any unfamiliar terms). Refer to the Hybrid System page to see that in three of the years in the Table one would be eating into principal by withdrawing 9%, but the average return over the ten years presented would cover the withdrawals (assume a 50/50 stocks/non-stocks mix and return on stocks of 16% or 8% on your total and 3% or 1.5% on the non-stocks; 8+1.5=9.5%). Note that credit for compounding was not included in the Table, so does not affect this illustration.

Fees for managed accounts:

Managed Account Annual Management Fees, payable monthly in advance (payable quarterly if monthly is $75 or less).

Short-Term or Hybrid Systems

Amount under management                 Fee

at month begin                                % Annually                        Comment

>$500,000.                                    1%

$250,000-500,000.                        1.5%                            not to exceed $5000.

$100,000-250,000.                        2%                                not to exceed $3750.

$20,000-$100,000.                        3%                                not to exceed $2000.

($20,000 is minimum account size)

Long-Term System: One-half of above fees

Fees Subject to Revision. If you wish to discuss a managed account, please email Dr. Field at rfield55@yahoo.com; you may include your phone number if you would like us to call you directly. If you are in the Houston, TX area, we will be happy to visit you personally at no obligation.