Financial Planning Strategies for Individuals & Families

Barry Mendelson, CFP®Financial Advisor & Partner925-988-0330 x22Barry@JustPlans-Etc.com

As of March 31, 2011

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Opinions expressed are those of Barry Mendelson, CFP® and Just Plans Etc.

This presentation should not be construed as investment advice.

The information contained in this presentation is compiled from sources believed to be reliable.

Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

The markets can remain irrational longer than you can remain solvent.

Disclosures

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Barry Mendelson, CFP®

Local investment and personal finance professional. More than 15 years experience working for leading financial services companies including Charles Schwab, AXA Rosenberg, Neuberger Berman, and Franklin Templeton. Prior to joining Just Plans Etc. in 2010, was a Vice President in Charles Schwab & Co’s $250 billion investment management division. Certified Financial Planner™ certificate holder since 2008. B.A. in Business Economics & Accounting from U.C. Santa Barbara in 1995.

Just Plans Etc.

Founded in 1983 and based in Walnut Creek, California - Just Plans is a fee-only wealth management firm and SEC registered investment advisor. Just Plans provides investment management and financial planning services to more than 100 individuals, families, and companies. The firm specializes in tax-efficient investing and helping investors realize meaningful value from qualified retirement plans, concentrated stocks positions, stock options, and other forms of equity. As a fiduciary, the firm puts the interests of the client above all else.

About

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Agenda

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1. Financial Planning

2. Investment Planning

3. Lessons for the Future

1. Financial Planning

2. Investment Planning

3. Lessons for the Future

Agenda

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1. Financial Planning1. Financial Planning

Charles Schwab

More than 30 years ago, Charles R. Schwab founded this firm with a clear mission: to

empower individual investors to take control of their financial lives, free from the

high costs and conflicts of traditional brokerage firms. His vision - to provide the

most useful and ethical financial services in the world - continues to guide or values-

driven approach to growth, client service, community involvement and employee

development.

Google

Google’s mission is to organize the world‘s information and make it universally

accessible and useful.

Don’t be evil. (Unofficial).

Create a (Family) Mission Statement

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Create a Family Mission Statement

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What’s most important about our family?

What do you think our goals should be?

What are our strengths as a family?

How should we take care of relatives who are or become sick or disabled?

How should we resolve our disputes?

How important is the family business to you?

What professionals or structures should we bring in to help us?

What do you think the role of our family should be in helping the community?

What should we be doing individually and as a family with regard to philanthropy?

Example: Smith Family Mission Statement

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Know that time is our most valuable asset.

Experiences are more valuable than possessions.

Spend time outdoors as a family.

Explore the world and welcome others into our home.

Support (through financial and volunteer efforts) public education and the Cancer Support Community of the Bay Area.

Spend time with those we love and respect – and feel the same way about us.

Learn and work in the family business.

Define Short & Long-Term Goals

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You

Short-term: 5 Years or less _____________________ _____________________ _____________________

Long-term: 5 years and longer _____________________ _____________________ _____________________

Your Spouse

Short-term: 5 Years or less _____________________ _____________________ _____________________

Long-term: 5 years and longer _____________________ _____________________ _____________________

Letter to Self

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On February 23, 2011 I/we currently have an available after-tax income stream of $ per month (including spouse if applicable).

My/our current lifestyle costs are $ per month. I/we currently save $ per month in tax deferred accounts and $ per

month in after tax accounts. My/our current net worth is $ . This includes a retirement plan balance

of $ , assets of $ , and personal investments of $ . I plan on retiring in the year 20 , which is years from now. My post retirement lifestyle expenses will be $ per year / $ per

month. Based on living until age , I will need to have accumulated $ by age ,

in pre-tax and post-tax dollars to be comfortable in retirement and potentially leave a legacy to others.

Base on the above information, I need to take the following actions: ,

.

Not Everything is in Your Control

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CONTROLHow much I saveHow much I spendLifestyle - # of homes, travel, autos.Allocation of assets (amount of risk)When I retireHow much insurance I haveHow much I give to charityHow much I makeBegin Social Security Benefits

NO CONTROLMarketsDeath - geneticsChildren’s behaviorReimbursementsDisabilityInflationTax rates & political conditionsWeatherThe Media

Define Your Lifestyle Goals

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For each Goal, establish Ideal and Acceptable amounts.

Lifestyle Goals Ideal

Basic Living Expenses $$$

Car $$$

Travel $$$

Boat $$$

Lifestyle Goals Ideal Acceptable

Basic Living Expenses $$$ $

Car $$$ $

Travel $$$ $

Boat $$$ $

Acceptable Range

Lifestyle Goals

Basic Living Expenses

Car

Travel

Boat

Define Your Lifestyle Goals

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Acceptable Range

Retirement Age Ideal Acceptable How willing are you to retire later?

You 60 66 Somewhat Willing

Your Spouse 62 70 Very Willing

Retirement Age Ideal Acceptable

You 60 66

Your Spouse 62 70

Retirement Age Ideal

You 60

Your Spouse 62

Plan for Future Living Expenses

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Importance Lifestyle Goals Ideal Acceptable

Needs

10 Basic Living Expense $70,000 $66,000

8 Your Lexus $35,000 $25,000

Wants

7 Annual Travel Fund $18,000 $12,000

6 Your Spouse’s Honda $25,000 $15,000

Wishes

3 Renovate Kitchen $50,000 $25,000

2 Gifts to Children $10,000 $0

Total Spending for Life of Plan $2,615,000 $2,130,00019% < Ideal

Acceptable Range

Range of Ideal and Acceptable Goals

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IDEAL ACCEPTABLERetirement Age: 60 66

62 70

Retirement Income: $160,000 $145,000

Risk Tolerance: No Risk Moderate

Estate: $1,000,000 $100,000

Education: Law School $ -

Savings: -$15,000 +$10,000

Travel (other): $25,000 $15,000

Annual Savings to Accumulate $1 Million by Age 65

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Annual Savings

What Kind of Investor Are You?

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Very Conservative Conservative Moderate Aggressive Very Aggressive

Can you get the RETURN you need at the RISK level you’re willing to accept?

Agenda

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2. Investment Planning2. Investment Planning

S&P 500 Index Returns

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Charts reflect index levels (price change only). All returns and annotations reflect total return, including dividends.

Jan-10 Jun-10 Oct-10 Apr-11

1,000

1,100

1,200

1,300

1,400

S&P 500 Index

2010: +15.1% 1Q11: +5.9%

Jan-07 May-08 Oct-09 Apr-11

600

800

1,000

1,200

1,400

1,600

S&P 500 Index

Since 10/9/07 Peak: -8.5%

Since 3/9/09 Low: +104.5%

Source: Russell Investment Group, Standard & Poor’s, FactSet, J.P. Morgan Asset Management.

All calculations are cumulative total return, including dividends reinvested for the stated period. Since Market Peak represents period 10/9/07 – 3/31/11, illustrating market returns since the most recent S&P 500 Index high on 10/9/07. Since Market Low represents period 3/9/09 –3/31/11, illustrating market returns since the S&P 500 Index low on 3/9/09. Returns are cumulative returns, not annualized. For all time

periods, total return is based on Russell- style indexes with the exception of the large blend category, which is reflected by the S&P 500 Index. Past performance is not indicative of future returns.

Data are as of 3/31/11.

Various Asset Class Returns

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10-yrs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1Q11 '01 - '10

REITs REITsDJ UBSCmdty

MSCIEME

REITsMSCIEME

REITsMSCIEME

Barclays Agg

MSCIEME

REITsRussell 2000

MSCIEME

26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 7.9% 350.0%

DJ UBSCmdty

Market Neutral

Barclays Agg

Russell 2000

MSCIEME

DJ UBSCmdty

MSCIEME

MSCI EAFE

Market Neutral

MSCI EAFE

Russell 2000

REITs REITs

24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 7.5% 178.0%

Market Neutral

Barclays Agg

Market Neutral

MSCI EAFE

MSCI EAFE

MSCI EAFE

MSCI EAFE

DJ UBSCmdty

Asset Alloc.

REITsMSCIEME

S&P500

Russell 2000

15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 5.9% 84.8%

Barclays Agg

Russell 2000

REITs REITsRussell 2000

REITsRussell 2000

Market Neutral

Russell 2000

Russell 2000

DJ UBSCmdty

DJ UBSCmdty

Asset Alloc.

11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 4.4% 80.2%

Asset Alloc.

MSCIEME

Asset Alloc.

S&P500

Asset Alloc.

Asset Alloc.

S&P500

Asset Alloc.

DJ UBSCmdty

S&P500

S&P500

Asset Alloc.

Market Neutral

0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 3.7% 76.9%.

Russell 2000

Asset Alloc.

MSCIEME

Asset Alloc.

S&P500

Market Neutral

Asset Alloc.

Barclays Agg

S&P500

Asset Alloc.

Asset Alloc.

MSCI EAFE

Barclays Agg

-3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 3.5% 76.3%

S&P500

S&P500

MSCI EAFE

DJ UBSCmdty

DJ UBSCmdty

S&P500

Market Neutral

S&P500

REITsDJ UBSCmdty

MSCI EAFE

Market Neutral

MSCI EAFE

-9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 2.3% 47.1%

MSCI EAFE

MSCI EAFE

Russell 2000

Market Neutral

Market Neutral

Russell 2000

Barclays Agg

Russell 2000

MSCI EAFE

Barclays Agg

Barclays Agg

MSCIEME

DJ UBSCmdty

-14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% 2.1% 41.7%

MSCIEME

DJ UBSCmdty

S&P500

Barclays Agg

Barclays Agg

Barclays Agg

DJ UBSCmdty

REITsMSCIEME

Market Neutral

Market Neutral

Barclays Agg

S&P500

-30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% 0.4% 15.1%

Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management.

The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAF E, 5% in the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities represent total return for stated period. Past performance is not

indicative of future returns. Data are as of 3/31/11, except for the CS/Tremont Equity Market Neutral Index, which reflects data through

2/28/11. “10- yrs” returns represent cumulative total return and are not annualized. These returns reflect the period from 1/1/01 – 12/31/10.

Please see disclosure page at end for index definitions. * Market Neutral returns include estimates found in disclosures.

Data are as of 3/31/11.

Global Commodities

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'01 '02 '03 '04 '05 '06 '07 '08 '09 '100

50

100

150

200

250

300

350

400

450

500

0

500

1000

1500

2000

2500

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10

Source: Dow Jones/UBS, FactSet, J.P. Morgan Asset Management.

Commodity prices represented by the appropriate DJ/UBS Commodity sub- index.

Data reflect most recently available as of 3/31/11.

Source: USDA, BP Statistical Review of World Energy, J.P. Morgan Asset Management.

Data are as of 3/31/11.

Commodity Prices Weekly index prices rebased to 100

Precious metals

Industrial metals

Energy

Livestock

Grains

Oil Demand: Emerging Markets Share Emerging markets as % of total global oil consumption

Grain Demand: Emerging vs. Developed MarketsMillions of metric tons

Emerging Markets

Developed Markets

30%

32%

34%

36%

38%

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09

Monthly: January 1926 - December 2010

CRSP data provided by the Center for Research in Security Prices, University of Chicago. The S&P data are provided by Standard & Poor's Index Services Group. US long-term bonds, bills, inflation, and fixed income factor data © Stocks, Bonds, Bills, and Inflation Yearbook™, Ibbotson Associates, Chicago (annually updated work by Roger G. Ibbotson and Rex A. Sinquefield).

$8,201Small Cap(CRSP 6-10 Index)

$2,590Large Cap (S&P 500 Index)

$85Long-Term Government Bonds Index$20Treasury Bills

$12Inflation (CPI)

$10,000

$1,000

$100

$10

$1

$0

1926 1936 1946 1956 1966 1976 1986 1996 2006 2010

Growth of Wealth

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Average Duration

Bull Market: 413 DaysBear Market: 220 Days

Average Return

Bull Market: 58%Bear Market: -21%

220%

-13%

-85%

20%

-16%

-39%

119%

87%

27%

-15%-10%

-13%

100%

44%

-53%

25%

40%

-13%-14%

26%

-25%

22%

-11%

23%

-33%

83%

-11%

99%

-26%

19%

-11%-

16%

26%

53%

91%

-13%

121%

-11%

26%

-13%

18%

69%

-21%-11%

44%

-27%

15%

96%

-11%

59%

-27%

-10% -

21% -32%

56%

-12%

38%

-45%

22%

-13%

50%

-13%

38%

-15%

27%

-13%

26%

-10%

21%

-16%

48%

-20%

78%

-11%

156%

-33%

73%

-10%

16%

-19%

303%

-12%

37%

50%

-19%

-12%

23%

-11%

13%

-47%

21%

-14%

113%

03/09/2009-55%

12/31/2010

-13%1%

1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

S&P 500 Index (USD)Daily Returns: January 1, 1926 - December 31, 2010

Bull and Bear Markets

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Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. The S&P data are provided by CRSP (January 1, 1926–August 31, 2008) and Bloomberg (September 1, 2008–present). Returns include reinvested dividends. Bull and bear markets are defined in hindsight using cumulative daily returns. A bear market (1) begins with a negative daily return, (2) must achieve a cumulative return less than or equal to -10%, and (3) ends at the most negative cumulative return prior to achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market. Performance data represents past performance and does not predict future performance.

Historical returns by holding period

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-37%

-8%

-15%

-2% -2% 1%-1% 1% 2%

6%

1%

5%

51%

43%

32%28%

23% 21% 19%16% 17% 18%

12%14%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

1-yr. 5- yr. rolling 10- yr. rolling 20- yr. rolling

Annual total returns, 1950 - 2010Range of Stock, Bond, and Blended Total Returns

Asset Sources: Barclays Capital, FactSet , Robert Shiller, Strategas /Ibbotson, Federal Reserve, J.P. Morgan Asset Management.

Data are as of 12/31/10.

50/50 Portfolio 9.0% $ 559,744

Bonds 6.2% $ 336,138

Stocks 10.9% $ 792,519

Annual Avg. Total Return

50/50 Portfolio

Bonds

Stocks

Growth of $100,000 over 20 years

Diversification and the Average Investor

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20-year Annualized Returns by Asset Class (1991 – 2010)

(Top) Indexes and weights of the traditional portfolio are as follows: U.S. stocks: 55% S&P 500, U.S. bonds: 30% Barclays Capital Aggregate. International stocks: 15% MSCI EAFE/ Portfolio with 25% in alternatives is as follows: U.S. stocks: 22.1% S&P 500, 8.8% Russell 2000; International Stocks: 4.4% MSCI EM, 13.2% MSCI EAFE; U.S. Bonds: 26.5% Barclays Capital Aggregate; Alternatives: 8.3% CS/Tremont Equity Market Neutral, 8.3% DJ/UBS Commodities, 8.3% NAREIT Equity REIT Index. Return and standard deviation calculated

using Zephyr.Charts are shown for illustrative purposes only. Past returns are no guarantee of future results. Diversification does not guarantee investment returns and does not eliminate risk of loss. Data are as of

12/31/10.

(Bottom) Indexes used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Barclays Capital U.S. Aggregate Index, Homes: median sale price of existing single- family homes, Gold: USD/troy oz, Inflation: CPI. Average asset allocation investor return is based on an

analysis by Dalbar Inc. which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable)

and represent the 20- year period ending 12/31/10 to match Dalbar’smost recent analysis.

Traditional Portfolio More Diversified Portfolio

Return: 6.86%Standard Deviation: 11.12%

Return: 7.92%Standard Deviation: 9.99%

Maximizing the Power of Diversification (1994 – 2010)

55%

15%

30% S&P 500

MSCI EAFE

Barclays Agg.

8%8%

8%

22%9%

13%4%

26%

Equity Mkt. Neutral

Commodities

REIT

S&P 500

Russell 2000

MSCI EAFE

MSCI EM

Barclays Agg.

10.5%

8.0% 7.7%7.2%

6.1%

4.7%

2.8% 2.6% 2.4%

0%

2%

4%

6%

8%

10%

12%

REITS Oil S&P 500 Gold Bonds EAFE Homes Average Investor

Inflation

Various Asset Class Returns

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Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s, Barclays Capital, NAREIT, J.P. Morgan Asset Management.

The “Asset Allocation” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAF E, 5% in the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index and5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities represent total return for stated period. Past performance is not

indicative of future returns. Data are as of 3/31/11, except for the CS/Tremont Equity Market Neutral Index, which reflects data through

2/28/11. “10- yrs” returns represent cumulative total return and are not annualized. These returns reflect the period from 1/1/01 – 12/31/10.

Please see disclosure page at end for index definitions. * Market Neutral returns include estimates found in disclosures.

Data are as of 3/31/11.

10-yrs

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1Q11 '01 - '10

REITs REITsDJ UBSCmdty

MSCIEME

REITsMSCIEME

REITsMSCIEME

Barclays Agg

MSCIEME

REITsRussell 2000

MSCIEME

26.4% 13.9% 23.9% 56.3% 31.6% 34.5% 35.1% 39.8% 5.2% 79.0% 28.0% 7.9% 350.0%

DJ UBSCmdty

Market Neutral

Barclays Agg

Russell 2000

MSCIEME

DJ UBSCmdty

MSCIEME

MSCI EAFE

Market Neutral

MSCI EAFE

Russell 2000

REITs REITs

24.2% 9.3% 10.3% 47.3% 26.0% 17.6% 32.6% 11.6% 1.1%* 32.5% 26.9% 7.5% 178.0%

Market Neutral

Barclays Agg

Market Neutral

MSCI EAFE

MSCI EAFE

MSCI EAFE

MSCI EAFE

DJ UBSCmdty

Asset Alloc.

REITsMSCIEME

S&P500

Russell 2000

15.0% 8.4% 7.4% 39.2% 20.7% 14.0% 26.9% 11.1% -23.8% 28.0% 19.2% 5.9% 84.8%

Barclays Agg

Russell 2000

REITs REITsRussell 2000

REITsRussell 2000

Market Neutral

Russell 2000

Russell 2000

DJ UBSCmdty

DJ UBSCmdty

Asset Alloc.

11.6% 2.5% 3.8% 37.1% 18.3% 12.2% 18.4% 9.3% -33.8% 27.2% 16.7% 4.4% 80.2%

Asset Alloc.

MSCIEME

Asset Alloc.

S&P500

Asset Alloc.

Asset Alloc.

S&P500

Asset Alloc.

DJ UBSCmdty

S&P500

S&P500

Asset Alloc.

Market Neutral

0.6% -2.4% -5.4% 28.7% 12.5% 8.0% 15.8% 7.3% -36.6% 26.5% 15.1% 3.7% 76.9%.

Russell 2000

Asset Alloc.

MSCIEME

Asset Alloc.

S&P500

Market Neutral

Asset Alloc.

Barclays Agg

S&P500

Asset Alloc.

Asset Alloc.

MSCI EAFE

Barclays Agg

-3.0% -3.4% -6.0% 25.2% 10.9% 6.1% 14.9% 7.0% -37.0% 22.5% 12.7% 3.5% 76.3%

S&P500

S&P500

MSCI EAFE

DJ UBSCmdty

DJ UBSCmdty

S&P500

Market Neutral

S&P500

REITsDJ UBSCmdty

MSCI EAFE

Market Neutral

MSCI EAFE

-9.1% -11.9% -15.7% 22.7% 7.6% 4.9% 11.2% 5.5% -37.7% 18.7% 8.2% 2.3% 47.1%

MSCI EAFE

MSCI EAFE

Russell 2000

Market Neutral

Market Neutral

Russell 2000

Barclays Agg

Russell 2000

MSCI EAFE

Barclays Agg

Barclays Agg

MSCIEME

DJ UBSCmdty

-14.0% -21.2% -20.5% 7.1% 6.5% 4.6% 4.3% -1.6% -43.1% 5.9% 6.5% 2.1% 41.7%

MSCIEME

DJ UBSCmdty

S&P500

Barclays Agg

Barclays Agg

Barclays Agg

DJ UBSCmdty

REITsMSCIEME

Market Neutral

Market Neutral

Barclays Agg

S&P500

-30.6% -22.3% -22.1% 4.1% 4.3% 2.4% -2.7% -15.7% -53.2% 4.1% -2.5% 0.4% 15.1%

Agenda

27

3. Lessons for the Future3. Lessons for the Future

Lessons

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This is an exciting and challenging time to be an investor.

You owe it to your family and yourself to make sure that your plan is designed to deal with the changes you’ve experienced the last few years and take advantage of opportunities to maximize the probability that you will achieve all your financial goals.

We wish you nothing but success in achieving all that’s important to you.

Lessons

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1. Define your goals.

2. Create a plan.

3. Put it into action.

4. Revisit it frequently.

Lessons

30

1. Markets are difficult to predict in the short-term.

2. Intelligently diversifying globally expands your opportunity set.

3. “Be greedy when others are fearful and fearful when others are greedy.” – Warren Buffet.

4. Have a long-term perspective.

Articles:

Creating a Family Mission Statement

Creating a Personal Disaster Plan for Your Home, Your Loved Ones and Your Finances

Budget Worksheet

The Organizer

More articles at:www.justplans-etc.blogspot.com

Barry Mendelson, CFP® Financial Advisor & Partner

925-988-0330 ext. 22 1399 Ygnacio Valley Rd, Suite 24 Barry@JustPlans-Etc.com Walnut Creek, CA 94598

www.JustPlans-Etc.com

Resources

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