Title: Protecting Eleanor: See How a $1.8M IRA Gained Peace of Mind Tagline: De-Risking Retirement: How a Sortino Ratio Analysis Saved a Widow $30,000 in Potential Losses Problem: Recently widowed, Eleanor inherited a $1.8 million Traditional IRA from her late husband. She's risk-averse and concerned about preserving her capital during market volatility, especially given her reliance on the IRA for retirement income. Her financial advisor presented two investment options: Option A, a diversified stock portfolio with a historical average annual return of 8% and a downside deviation of 12%, and Option B, a conservative bond fund with a historical average annual return of 4% and a downside deviation of 3%. Eleanor struggles to understand which option better protects her capital while still providing adequate returns. She wants to minimize potential losses during market downturns and is hesitant to invest aggressively after experiencing such a significant life change. Solution: By using the Golden Door Asset Sortino Ratio Calculator, Eleanor can compare the risk-adjusted returns of both investment options. The calculator reveals that Option A has a Sortino Ratio of 0.67 (8% - Risk-Free Rate (assumed 3%)) / 12% = 0.42, while Option B has a Sortino Ratio of 0.33 ((4%-3%)/3%). Option A offers higher returns but with more risk. To reduce risk in Option A, she decides to allocate 20% of the portfolio to Put Options. This strategy limits downside risk, while still allowing for participation in market upside. ROI: By incorporating put options, Eleanor reduces her potential downside exposure in Option A. Assuming the put options cost 1% of the portfolio value annually, the revised expected return becomes 7% (8%-1%). If this option protects her from at least 2% in losses due to its downside protection, Eleanor has improved her outcomes by $36,000 annually (2% of $1.8M). This allows Eleanor to draw down her savings safely knowing that she has maximized her returns, and minimized her risk. Description: Ensure your retirement portfolio is truly prepared for market downturns. Calculate your downside risk-adjusted return and sleep soundly. Category: Client Service