Asset allocation — A balancing act.
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If you are like most investors, you probably find it difficult to know
when and how to make changes to your investments. Unfortunately,
when it comes to investing, there is no way to know what asset
classes will perform well from year to year. In any given year, some
asset classes may perform well while others may not. Many investors
let their emotions get the best of them — selling out of poor
performing investments and chasing after the latest “hot” fund.
Asset allocation — or diversifying your investments among different kinds of asset
classes — is a disciplined strategy that can help remove emotions from the equation.
While asset allocation does not assure a profit or protect you against a loss, a
diversified portfolio can help you weather the market’s ups and downs and potentially
reduce the level of volatility in your investment portfolio.
Methodology for allocations to the hypothetical portfolios:
• Equity allocation: The equity portion is split into 30% international and 70% domestic. The domestic equity portion
follows similar allocations as the Russell 3000® Index, which is 70% large cap, 20% mid cap, and 10% small cap.
• Fixed income allocation: The fixed income portion is allocated to bonds and cash equivalents. Cash equivalents
increase as a percentage of the portfolio as the portfolios become more conservative.
• Quarterly rebalancing to maintain alignment with original allocations.
Indices are unmanaged and do not incur management fees or other expenses. You cannot invest directly in an index.
More Conservative
More Aggressive
20% Equities/ 80% Fixed Income
n Domestic Large Cap Stocks/S&P 500 10%
n Domestic Mid Cap Stocks/Russell Midcap 3%
n Domestic Small Cap Stocks/Russell 2000 1%
n International Stocks/MSCI EAFE 6% n Bonds/Barclays Capital Aggregate Bond Index 60% n Cash Equivalents/3-Month T-Bill 20%
35% Equities/ 65% Fixed Income
n Domestic Large Cap Stocks/S&P 500 18%
n Domestic Mid Cap Stocks/Russell Midcap 5%
n Domestic Small Cap Stocks/Russell 2000 2%
n International Stocks/MSCI EAFE 10% n Bonds/ Barclays Capital Aggregate Bond Index 55% n Cash Equivalents/3-Month T-Bill 10%
50% Equities/ 50% Fixed Income
n Domestic Large Cap Stocks/S&P 500 24%
n Domestic Mid Cap Stocks/Russell Midcap 7%
n Domestic Small Cap Stocks/Russell 2000 4%
n International Stocks/MSCI EAFE 15% n Bonds/ Barclays Capital Aggregate Bond Index 45% n Cash Equivalents/3-Month T-Bill 5%
65% Equities/ 35% Fixed Income
n Domestic Large Cap Stocks/S&P 500 32%
n Domestic Mid Cap Stocks/Russell Midcap 9%
n Domestic Small Cap Stocks/Russell 2000 5%
n International Stocks/MSCI EAFE 19% n Bonds/ Barclays Capital Aggregate Bond Index 30% n Cash Equivalents/3-Month T-Bill 5%
80% Equities/ 20% Fixed Income
n Domestic Large Cap Stocks/S&P 500 39%
n Domestic Mid Cap Stocks/Russell Midcap 11%
n Domestic Small Cap Stocks/Russell 2000 6%
n International Stocks/MSCI EAFE 24% n Bonds/ Barclays Capital Aggregate Bond Index 20% n Cash Equivalents/3-Month T-Bill 0%
These reflect historical performance for five hypothetical portfolios with asset allocation strategies that vary
based on a risk profile. Your financial professional can work with you to design an asset allocation strategy that
is right for your timeframe and tolerance for risk.
Historical returns for the hypothetical portfolios.
20-year historical annual returns.
Index definitions
Citigroup 3-Month T-Bill Index (3-Month T-Bill): Calculated by taking the average weekly auction rates for 90-day U.S. Treasury Bills during the month.
Barclays Capital Aggregate Bond Index: Composed of the Barclays Capital Govt/Credit Index, the Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.
Morgan Stanley Capital International EAFE Index (MSCI EAFE): This Europe, Australasia and Far East index is a market capitalization-weighted index composed of 21 non-U.S. industrialized country indices.
Russell 2000®Index (Russell 2000): Consists of the smallest 2000 companies in the Russell 3000® Index, representing approximately 10% of the Russell 3000 Index’s total market capitalization.
Russell Midcap®Index: Measures the performance of the 800 smallest companies in the Russell 1000® Index, which represent approximately 31% of the total market capitalization of the Russell 1000 Index.
Standard & Poor’s Stock Market Index (S&P 500): A market capitalization-weighted index of 500 widely held stocks, often used as a proxy for the U.S. stock market.
Annual returns represent the weighted average performance using the indices and the percentages shown in the pie charts. All returns are year-end. This is a hypothetical illustration and does not refer to any future performance. Nor does it imply any guaranteed earnings, contributions, actual rate of return or tax bracket.
Standard deviation is a statistical measure of variability. It measures how far a value is from the average.
• 20% Equities
• 80% Fixed Income
• 35% Equities
• 65% Fixed Income
• 50% Equities
• 50% Fixed Income
• 65% Equities
• 35% Fixed Income
• 80% Equities
• 20% Fixed Income
Year Annual Return Year Annual Return Year Annual Return Year Annual Return Year Annual Return1996 6.54% 1996 8.41% 1996 10.17% 1996 12.26% 1996 14.12% 1997 11.32% 1997 13.80% 1997 15.66% 1997 17.68% 1997 19.62% 1998 11.05% 1998 13.61% 1998 15.45% 1998 17.30% 1998 19.13% 1999 4.88% 1999 7.79% 1999 11.08% 1999 14.62% 1999 17.95% 2000 6.47% 2000 4.06% 2000 1.42% 2000 -1.45% 2000 -4.07% 2001 3.51% 2001 0.90% 2001 -1.94% 2001 -5.16% 2001 -8.31% 2002 2.59% 2002 -1.05% 2002 -5.00% 2002 -9.44% 2002 -13.38% 2003 9.32% 2003 14.05% 2003 18.97% 2003 23.52% 2003 28.42% 2004 5.98% 2004 7.93% 2004 9.90% 2004 11.52% 2004 13.40% 2005 3.83% 2005 4.66% 2005 5.60% 2005 6.48% 2005 7.43% 2006 7.31% 2006 9.42% 2006 11.70% 2006 13.89% 2006 16.18% 2007 6.58% 2007 6.79% 2007 6.85% 2007 6.79% 2007 6.89% 2008 -5.50% 2008 -12.26% 2008 -18.89% 2008 -25.32% 2008 -31.36% 2009 9.79% 2009 14.07% 2009 18.10% 2009 21.69% 2009 25.61% 2010 7.29% 2010 9.43% 2010 11.19% 2010 12.46% 2010 13.92% 2011 4.47% 2011 3.87% 2011 2.57% 2011 0.96% 2011 -0.50% 2012 5.94% 2012 8.26% 2012 10.39% 2012 12.27% 2012 14.37% 2013 4.36% 2013 8.83% 2013 13.52% 2013 18.51% 2013 23.45% 2014 5.09% 2014 6.00% 2014 6.35% 2014 6.35% 2014 7.09% 2015 0.45% 2015 0.47% 2015 0.36% 2015 0.27% 2015 0.16%
Standard Deviation 3.69% Standard Deviation 5.67% Standard Deviation 7. 83% Standard Deviation 10.05% Standard Deviation 12.35%
20 year
Returns represent the weighted average performance using the indices and the percentages shown in the pie charts. This is a hypothetical illustration and does not refer to any future performance. Nor does it imply any guaranteed earnings, contributions, actual rate of return or tax bracket.
• 20% Equities
• 80% Fixed Income
• 35% Equities
• 65% Fixed Income
• 50% Equities
• 50% Fixed Income
• 65% Equities
• 35% Fixed Income
• 80% Equities
• 20% Fixed Income
1 year 0.45% 0.47% 0.36% 0.27% 0.16% 3 year 3.28% 5.04% 6.61% 8.22% 9.81% 5 year 4.04% 5.44% 6.53% 7.52% 8.55% 10 year 4.49% 5.25% 5.72% 5.97% 6.28% 15 year 4.67% 5.22% 5.53% 5.55% 5.66% 20 year 5.50% 6.27% 6.79% 7.09% 7.44%
Domestic Stock
Mid Cap: Stocks of medium-sized companies are subject to more abrupt or erratic price movements than stocks of larger companies.
Small Cap: Stocks of small-sized companies are subject to more abrupt or erratic price movements than stocks of larger companies. Some of these companies have fewer financial resources.
International
There are special risk considerations associated with international investing related to market, currency, economic, political and other factors including foreign accounting practices and variations in foreign regulations.
RiverSource Distributors, Inc. (Distributor), Member FINRA. Insurance and annuity products are issued by RiverSource Life Insurance Company and in New York, by RiverSource Life Insurance Co. of New York, Albany, New York. Only RiverSource Life Insurance Co. of New York is authorized to sell insurance and annuities in New York. © 2005-2016 RiverSource Life Insurance Company. All rights reserved.
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RiverSource Life Insurance Company 9549 Ameriprise Financial Center Minneapolis, MN 55474
RiverSource Life Insurance Co. of New York 20 Madison Avenue Extension
P.O. Box 5144, Albany, NY 12205
The returns shown do not include expenses or charges that, if reflected, could reduce the figures shown. Past performance is no guarantee of future results. There is no guarantee that investment objectives will be satisfied or that return expectations will be met. Bonds
There are risks associated with an investment in a bond fund, including the impact of interest rates, credit and inflation. These and other risk considerations are discussed in the fund’s prospectus. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities.
High-Yield Bond OR High-Yield Fixed Income: Yield refers to the performance of the underlying variable product fund, not bond credit quality rating. Higher yield corporate “junk” bond prices may fluctuate more broadly than prices of higher quality bonds. Risk of principal and income also is greater than with higher quality securities.
