Page 38 - Mumme Booklet

DRAFT

DOUG AND MARIE MUMME

EFFICIENT FRONTIER

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The graph below demonstrates the risk/return trade-off facing an investor. The higher the potential return, the
greater the potential for loss of your investment principal. However, you can help reduce your level of risk,
and may increase your returns, by properly allocating your investable assets among various asset classes.
The line on the graph represents a series of hypothetical portfolios representing mixes of assets that produce
an efficient balance between risk and return. This line, known as the efficient frontier, demonstrates a key
ingredient of a successful investment plan: diversification.

7.0%

6.0%

5.0%
Expected Return 4.0% Efficient Frontier

Current Portfolio
Proposed Asset Allocation
3.0%

2.0%

1.0%

0.0%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%
Standard Deviation

You should carefully consider the risk/return trade-offs when choosing an asset mix. The table below shows
how the risk/return statistics for your Current Portfolio compare to your Proposed Asset Allocation that is
consistent with a Balanced risk profile.
Current Portfolio Proposed Allocation
Expected Return 4.2% 5.6%
Standard Deviation 5.7% 8.8%
Historical Performance Statistics (1991-2019)
Highest Return Year 1991 1991
Highest Return 15.2% 24.5%
Lowest Return Year 2008 2008
Lowest Return -10.9% -21.6%
Years with a Loss 4 5
IMPORTANT: The projections or other information generated by this Efficient Frontier tool regarding the
likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results
and are not guarantees of future results. Results may vary with each use and over time. Other investments
not considered may have characteristics that are similar to or superior to those being analyzed. No
investment strategy can guarantee a profit or protect against a loss. The Historical Performance Statistics
describe how this asset mix would have performed from 1991 - 2019, assuming that the same asset mix was
held throughout the entire period. It is hypothetical in nature and does not represent actual securities or
performance information.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This plan is not complete without the Assumptions and Disclosures pages appearing at the end.
3170326-1-4 January 29, 2021 Page 38 of 108