Financial Planning

Dr. Robby Gordon is a fee-only financial planner. He has been a financial consultant since 1981, with a degree in personal financial planning from UCI. He has achieved a high level of technical knowledge in personal financial management, investments, tax planning, and retirement planning. He teaches you how to budget, and also how to deal with a large sum of money such as a retirement plan or inheritance. He is equipped to analyze his clients' financial situations and help them achieve their goals. He is knowledgeable in all financial aspects of business and will help in the business planning and integrating this with each client's personal situation. Dr. Gordon provides quality advice uninfluenced by commission. He looks for the best way to construct a portfolio for each client. He will teach you how to achieve financial independence by understanding the advantages and disadvantages of all investments. He will teach you the complexity of different financial products and services, and how to come to full understanding of your financial status. Most people do not realize that low-cost services might actually be more expensive-once you count all the commissions they pay. Because commissions are not disclosed, clients think that they are getting something for nothing. The best way to work is with a fee-only financial planner and to stick with no-load products, which Dr. Gordon will teach you how to buy yourself or assist you in their purchase. Dr. Gordon will help you to look at the total picture, and will provide you with tools for dealing with monetary stress. He will teach you how to solve financial conflicts. He combines his in-depth knowledge of money issues with proven stress-management techniques by using his analytical and psychological skills to help individuals and corporations. Dollar Cost Averaging

Dollar cost averaging is the purchase of equal dollar amounts of an investment at regular time intervals. Following this strategy, a fixed dollar amount is invested in a security in each period. The investor must make a commitment to invest on a regular basis in order to make the plan work. The desired outcome of a dollar cost averaging program is growth in the value of the security to which the funds are allocated. The price of the investment security to which the funds are allocated. The price of the investment security will probably fluctuate over time. If the price declines, more shares are purchased per investment period. Conversely, if the price rises, fewer shares are purchased per period. For example, suppose an investor decided to invest $1,000 in a mutual fund each month. The first month, a share of this mutual fund is $20, so $1,000 purchases 50 shares. The next month, the price of a share of this fund has doubled to $40, so the same $1,000 purchases only 25 shares. The third month, the share price plunges to $10, allowing the purchase of 100 shares. The fourth month, the price recovers again to $20 and additional 50 shares are purchased for $1,000. Over this four-month period, the investor purchased 225 shares for $4,000. However, the price at the end of four months is $20 per share, so the 225 shares are worth $4,500. Thus, a gain of $500 was made on a $4,000 investment; this is a return of 12.5%. Of real significance, though, is that \this was accomplished even though $3,000 was invested when the price of the shares was at or above $20, the current price. Over the long term, dollar cost averaging almost always achieves this remarkable result. The average cost of mutual fund shares purchased this way w3ill always be less than their average value. The reason that dollar cost averaging works is because investors who are disciplined enough to follow this plan are forced to invest funds even when the market drops. Investors who follow their emotions would probably stay out of the market when it was down, and thereby would fail to make a profit. With dollar cost averaging, the average cost per share is lower when the investor buys at market bottoms as well as at market tops, instead of trying to guess where the market is going next. And the more frequently a fixed amount of funds is invested under a dollar cost averaging plan, the better the plan will work. A weekly or monthly investment is best. To show just how reliable dollar cost averaging is, Dr. Rober H. Persons, author of The Handbook of Formula Plans in the Stock Market, evaluated a dollar cost averaging program that started right at the top of the stock market in 1929 and rode out the whole Depression. He made a hypothetical investment every year in the 30 stocks that make up the Dow Jones Industrial Average. Persons also loaded the dice against dollar cost averaging y putting in his fixed investment at the market top for each year. Naturally, the portfolio lost money in the crash of 1929, but by 1935 the portfolio was already in the black (see Table 1). The reason is that the discipline of dollar cost averaging forced him to buy large numbers of shares in 1933 in the depths of the Depression. Table 1 Dollar Cost Averaging: 1929 - 1932 Amount Invested Year Annual Return Total Losses Year end Portfolio Value $10,000 1929 +8.4% -$840 $9,160 $10,000 1930 -24.9% -$5,611 $14,389 $10,000 1931 -43.3% -$16,273 $13,728 $10,000 1932 -8.2% -$18,228 $21,772 0 1933 +54% -$6,471 $33,529 0 1934 -1.4% -$6,940 $33,060 0 1935 +47.7% gain $48,830 It took the Dow Jones Industrial Average until 1954 to recover its peak of 1929, but by that time the hypothetical dollar cost averaging portfolio had doubled the investor's money. And by 1966, when Persons ended his study, the Dow was up 161% over its 1929 high, but the dollar costs averaging portfolio had appreciated 336% over cost.