key financial, inc. patricia c. brennan cfp ®, cfs 1560 mcdaniel dr. west chester, pa 19380 ph....

Key Financial, Inc.Patricia C. Brennan CFP®, CFS

1560 McDaniel Dr.West Chester, PA 19380

Ph. 610-429-9050Fax. 610-429-9279

E-Mail: [email protected]

Securities offered through Royal Alliance Associates, Inc., member FINRA/SIPC. Insurance services offered through Patricia Brennan are independent of Royal Alliance Associates, Inc. Advisory services offered through Key Financial, Inc., a registered investment advisor not affiliated with Royal Alliance Associates, Inc.

PECO Economic OutlookMarch 20, 2013

2

Cal Ripkin

3

The Lost Decade for the S&P 500

Figures quoted are for illustrative purposes only and are not necessarily indicative of past or future results of any specific investment.They do not include consideration of the time value of money, inflation, fluctuation in principal or in many instances, taxes.

4Figures quoted are for illustrative purposes only and are not necessarily indicative of past or future results of any specific investment.They do not include consideration of the time value of money, inflation, fluctuation in principal or in many instances, taxes.

Dow and S&P 500 About to End 13 Years of Sideways Action?

5

“I’m worried about the economy.”

10

The Efficiency Problem with Unemployment

Approximately 1Trillion Market Value

150,000 Employees Combined

Debt and Deficit

Current Debt is 16.5 Trillion

Annual Deficit of 1 Trillion per year!

11

12

Interest on the Debt

Today 2007 Rates* 230 Billion 800 Billion

*This represents Over 50% of All Income Tax Receipts in U.S.

(Not much left for Education, Defense, Medicare, etc).

13

Europe

14

The Great Experiment

15© American Funds Distributors, Inc.

A different perspective

*Market downturns are based on a decline of about 10% or more in the S&P 500’s value (excluding dividends and/or distributions) with 50% recovery after each decline.The daily values for this chart are based on the change in price of the companies in Standard & Poor’s 500 Composite Index (the S&P 500). Daily values and declines exclude dividends and/or distributions. The index is unmanaged and, therefore, has no expenses.

Downturns of 10% or more*

1975 1976 1977 1978 1979Good news

60

70

80

90

100

110

120

Microsoftfounded

Apple Computer founded

First linked automatedteller machines

(ATMs) introduced

Consumerconfidence

reaches 109.9

Unemploymentends the

period at 6%

Consumer confidencedrops to 43.2

Unemploymentreaches 9%

New York Citythreatens bankruptcy

Energycrisis

Massacres inCambodia

Inflationreaches 13%

Three Mile Islandnuclear accident

Iran hostagecrisis

10/3/74–10/3/79Average annual total return:

17.39%

S&P 500 Index

16

$100,000 Invested in the S&P 500

If you had invested By But by

September 1964 September 1972 September 1974

$100,000 $170,181 $104,993

Figures quoted are for illustrative purposes only and are not necessarily indicative of past or future results ofany specific investment. They do not include consideration of the time value of money, inflation, fluctuation in principal or income taxes. Past history is no guarantee of what you can expect in the future. An Index is a hypothetical portfolio of specific securities (common examples are the Dow Jones Industrial and the S&P 500). The performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and should only be compared with securities with similar investment characteristics and criteria. Investors cannot invest directly in an Index. Source: American Funds Hypothetical – Oct. 2008

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2 Options: Looking Forward;

Value Recovery Long TermSeptember 1974 Date October 31,2008

CD’s $104,993 Nov. 1979 (5 years)1 $926,956 (6.60%) Hold $104,993 Jan. 1976 (15 months)2 $4,701,371 (11.80%)

1 Assumes reinvestment into 6 month CD’s. 2 Value of S&P 500 would have been $224,382 in November, 1979.Source: American Funds Hypothetical. Rate of return is from date of investment in September 1964.Figures quoted are for illustrative purposes only and are not necessarily indicative of past or future results ofany specific investment. They do not include consideration of the time value of money, inflation, fluctuation in principal orin many instances, taxes. When viewing this data, clients should understand the differences between Certificate of Deposits (CDs) and Stocks. A CD is a timed deposit offered through banks which will offer FDIC insurance. A CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest. The return/performance provided through CDs will not be subject to the fluctuation experienced in equity markets as CDs offer a fixed rate of return and FDIC Insurance which will guarantee deposits up to a certain amount. Unlike CDs, equity investments such as stocks are not deposits, are not FDIC insured, and they can fluctuate in value. They are subject to risk, including possible loss of principal. Unlike CDs stocks can be sold and purchased at any time within trading hours. The point of this comparison is to illustrate the potential return of the equity market versus the return of fixed rate products such as CDs, however investors must consider the dramatic difference in risk associated with equity products and CDs when comparing these investments. This illustration is hypothetical and does not reflect the performance of any individual portfolio or Certificate of Deposit.

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In 2008, At Current CD Rates:

CDs (4%) Recovery Date Long Term 10/31/08

$104,993 Dec. 1985 (11 years) $399,680 (4.00%)

1 Assumes reinvestment into 6 month CD’s. 2 Value of S&P 500 would have been $224,382 in November, 1979.Source: American Funds Hypothetical. Rate of return is from date of investment in September 1964.Figures quoted are for illustrative purposes only and are not necessarily indicative of past or future results ofany specific investment. They do not include consideration of the time value of money, inflation, fluctuation in principal orin many instances, taxes. When viewing this data, clients should understand the differences between Certificate of Deposits (CDs) and Stocks. A CD is a timed deposit offered through banks which will offer FDIC insurance. A CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest. The return/performance provided through CDs will not be subject to the fluctuation experienced in equity markets as CDs offer a fixed rate of return and FDIC Insurance which will guarantee deposits up to a certain amount. Unlike CDs, equity investments such as stocks are not deposits, are not FDIC insured, and they can fluctuate in value. They are subject to risk, including possible loss of principal. Unlike CDs stocks can be sold and purchased at any time within trading hours. The point of this comparison is to illustrate the potential return of the equity market versus the return of fixed rate products such as CDs, however investors must consider the dramatic difference in risk associated with equity products and CDs when comparing these investments. This illustration is hypothetical and does not reflect the performance of any individual portfolio or Certificate of Deposit.

© American Funds Distributors, Inc.

*Market downturns are based on a decline of about 10% or more in the S&P 500’s value (excluding dividends and/or distributions) with 50% recovery after each decline.The percent decline is based on the index value of the unmanaged S&P 500, excluding dividends and/or distributions. Each market decline reflects a decline of about 15% or more in the S&P 500’s index value, without dividends reinvested, with 100% recovery between each decline (except for a 78% recovery between 3/6/78 and 11/28/80 and a 77% recovery between 3/9/09 and 4/29/11). The most recent decline may not be over, so dates and returns may change. The index is unmanaged and, therefore, has no expenses.

Periodsof decline

Percentdecline

12-month returns

9/7/29 – 6/1/32 – 86.22%

9/7/32 – 2/27/33 – 40.60

7/18/33 – 3/14/35 – 33.93

3/6/37 – 4/28/42 – 60.01

5/29/46 – 6/13/49 – 29.61

1/5/53 – 9/14/53 – 14.82

8/2/56 – 10/22/57 – 21.63

12/12/61 – 6/26/62 – 27.97

2/9/66 – 10/7/66 – 22.18

11/29/68 – 5/26/70 – 36.06

1/11/73 – 10/3/74 – 48.20

9/21/76 – 3/6/78 – 19.41

11/28/80 – 8/12/82 – 27.11

8/25/87 – 12/4/87 – 33.51

7/16/90 – 10/11/90 – 19.92

3/24/00 – 10/9/02 – 49.15

10/9/07 – 3/9/09 – 56.78

Average 55.95% 16.25% 10.02% 15.15% 11.70% 18.95%

Average annual total

return for the 5-year period

35.93%

21.57

14.03

19.96

23.90

21.54

10.82

15.57

10.04

9.31

17.39

18.24

31.90

17.97

17.83

17.14

N/A

Number ofdownturns during the

5-year period*

16

11

7

2

2

5

2

3

5

4

4

7

1

2

0

1

N/A

1st yearafter low

137.60%

105.43

88.37

64.26

52.74

45.46

36.30

37.42

37.34

48.96

44.43

18.76

66.11

25.92

33.55

36.15

72.28

2nd year

0.52%

– 14.77

30.91

8.96

20.95

50.22

13.23

21.12

10.04

14.56

25.99

17.20

6.80

33.76

8.82

9.91

18.08

3rd year

6.42%

74.12

– 37.51

31.08

20.33

9.19

– 1.44

5.10

– 7.37

0.37

– 2.86

25.80

18.52

– 3.74

17.71

8.51

6.07

4th year

56.68%

29.05

25.94

32.19

3.38

– 1.41

32.52

7.56

– 3.08

– 15.06

11.79

– 11.19

34.65

20.31

3.93

15.09

N/A

5th year

16.52%

– 32.50

– 0.65

– 19.89

27.04

12.76

– 17.10

9.57

18.89

7.28

12.82

48.59

40.98

17.12

27.75

18.05

N/A

4/29/11 – 10/3/11 – 19.39 N/A N/AN/A N/A N/AN/AN/A

19

21Source: Nick Murray Interactive February, 2013

23

1999 2012

S&P Earnings $50 $100

S&P 500 1,450 1,450

Earning Yield 3.5% 6.7%

10 Year Treasury 5% 1.8%

Dividends 1% 2.1% (Higher than 10yr Bond)

Source: Nick Murray Interactive Feb, 2013

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Action Items

1. Review your personal Financial Plan. How are you tracking?

2. Revisit Asset Allocation - Rebalance.

3. Understand the impact of the new tax law (Estate Plan also) on you and your family.

Investing involves risk including the potential loss of principal. No investment strategy, such as asset allocation and rebalancing, can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.

26

Cal Ripkin

27

15 years……

Video

28

Thank You For AttendingToday's Meeting

Key Financial, Inc.Patricia C. Brennan CFP®, CFS

1560 McDaniel Dr.West Chester, PA 19380

Ph. 610-429-9050Fax. 610-429-9279

E-Mail: [email protected]

Securities offered through Royal Alliance Associates, Inc., member FINRA/SIPC. Insurance services offered through Patricia Brennan are independent of Royal Alliance Associates, Inc. Advisory services offered through Key Financial, Inc., a registered investment advisor not affiliated with Royal Alliance Associates, Inc.

key financial, inc. patricia c. brennan cfp ®, cfs 1560 mcdaniel dr. west chester, pa 19380 ph....

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