Living Fully, Beyond Wealth into 2026

As we wrap up the year, we wanted to share a brief update on investment performance, discuss progress in implementing our Living Fully philosophy, provide an update on WJ, and give you a head start on your New Year's Resolutions. We'll provide a more detailed investment review during our upcoming 2026 WJ Investment Webinar - Let the Good Times Roll on January 15. Click here to RSVP

2025 is shaping up to be another strong year for global markets (all performance data through December 18). U.S. Large-cap stocks are up 16%, following stellar returns of 26% in 2023 and 24% in 2024. However, this year the spotlight shifted overseas with Developed international markets rising 30% and International emerging markets gaining 29%, reversing a long-standing trend of U.S. outperformance.

Equally encouraging for most WJ investors was the 7% gain in U.S. bonds, marking their best year since 2020. As we've discussed, higher yields have restored bonds' ability to generate inflation-beating returns for many years to come.  

As a result, a balanced portfolio of 60% stocks and 40% bonds rose approximately 16%, while an all-stock portfolio advanced 22%.

These figures reflect benchmark performance, not individual client results. In client portfolios, we incorporate active managers, tactical and uncorrelated strategies, and prudent leverage. These enhancements have added value over the last year and the long term, validating our investment approach and reinforcing our confidence going forward. If you'd like to review the value we're adding within managed portfolios, we invite you to schedule a meeting.

Outside of core stocks and bonds, tactical asset allocation strategies gained 15%, and reinsurance delivered another standout year, up 27%. Trend-following strategies were the laggards, down 2%, as volatility surrounding tariffs disrupted momentum in that space. Notably, our investment in reinsurance has doubled over the past three years, marking it as our top-performing investment.

Finally, while most investments have done well over the past three years, these exceptional returns will not persist indefinitely. As always, we're planning accordingly and recommend our investors do the same. For more on how we're positioning for the future, see our recent WJ Notes piece, "Portfolio Resilience: Embracing Uncertainty."

Living Fully Update

Over the past few years, we have continued to bring our "Living Fully, Beyond Wealth" philosophy to life with clients. The core idea is simple: many clients have accumulated, often by consistently living within their means, more wealth than is needed to support their desired lifestyle. While we've long acknowledged this reality in meetings, we've only recently shifted focus to the opportunities it creates, namely increased current spending and the potential of greater long-term wealth.
 
Throughout this year's client reviews, we've emphasized these opportunities and encouraged clients to take steps to Live Fully. As part of that effort, we've opened 19 legacy accounts representing over $16 million in assets, allocating assets unlikely to be spent during a client's lifetime into our most aggressive portfolio, the Enhanced Growth Portfolio. We've also helped many clients adopt a flexible spending approach in which discretionary spending adjusts based on recent investment performance.

Feedback on this philosophy has been overwhelmingly positive, and we plan to continue integrating these principles into our planning process. For a deeper discussion of our findings and framework, please see our white paper on "Living Fully, Beyond Wealth."

Happenings at WJ

WJ Interests continues to grow. This year, we welcomed a dozen new client families and expanded our team with several additions to help support that growth. We were thrilled to welcome Nick McGuire as a Lead Advisor. Nick joined us from Charles Schwab, where he spent six years providing direct wealth management advice to clients. In just a short time, he has already demonstrated his depth of knowledge and professionalism with many of our clients. If you haven't yet had a chance to meet Nick, let us know, we'd be happy to arrange an introduction.

We also added Claire Houston as our new Receptionist. A recent graduate of Texas State University, Claire brings a bright outlook and strong social media and marketing skills that complement her day-to-day responsibilities in office management, scheduling, and client service.

Our expansion doesn't stop there. In the first quarter of 2026, we'll be welcoming a newly graduated financial planner to the WJ team. He will join our group of six advisors and begin pursuing his CFP® certification right away. In keeping with our philosophy that direct experience is the best teacher, he'll be participating in client meetings from the start.

To support our team's growth, we're also remodeling our office in early 2026. The renovation will include a new bullpen area with four workstations for future team members. Additionally, we're extending our lease for another five years, reaffirming our commitment to our current location. Clients continue to tell us how much they appreciate the convenience and accessibility of our office, so staying put felt like the right move.

With both our team and office capacity expanded, we're well-positioned to continue growing in 2026. Most of our new relationships come from client referrals. If you've found value in what we do, please share your experience with friends and colleagues who might benefit. We would truly appreciate it.

Next Year

2026 will bring several important milestones and new initiatives for WJ Interests.

First, we will celebrate our 30th year in business. On February 3rd, Jonathan will host a discussion with Bill and Jared looking back on 30 years of WJ. Click here to RSVP

We are also planning a Philanthropy Summit focused on "Living Fully Through Charitable Giving." The event will highlight practical ways to incorporate charitable strategies into financial planning and how to select charities worthy of your donations.

On the investment front, we're introducing a direct indexing strategy designed to outperform its benchmark while generating capital losses to offset capital gains, helping improve tax efficiency. The strategy can be enhanced through leverage.

We will also begin using GLASfunds for all private investments. This will allow new investments to be custodied at Charles Schwab, provide a single performance portal, and issue a single consolidated K-1, a change we know clients will appreciate.

Finally, we have several internal projects underway that we'll share with you as they're completed throughout the year.

New Years' Resolutions

We're ending this WJ Notes with a bit of fun mixed with some investment advice. In the spirit of the season, here are some 2026 New Year's resolutions we hope you'll consider for yourself:

• I will right-size my cash balances as the real yield on cash is approaching zero. The glory days for cash are over.
• I will not take investment advice from a twenty-nine-year-old billionaire who, twelve years ago, got drunk, bought Bitcoin, and forgot about it until last year. This person has no special investing acumen and is not qualified to give advice. They got lucky.
• I will ignore all tariff announcements because they are subject to change within 10 minutes of being announced or are never implemented as described.
• I will not take investment advice from a well-coiffed, fifty-two-year-old with a spray tan who works for a Wall Street broker just because he's on CNBC. His advice is rife with conflicts, as most of the stocks he recommends do business with his firm in one form or another.
• I will ignore all extreme doom-and-gloom forecasters because they are always wrong, and if they are ever right, my investments won't be my biggest concern.
• I will use AI as much as possible and pay whatever it costs, so that the companies providing it earn a return on their trillions of dollars of investments and don't fail and crash the economy.
• I will remember the last three years and any future bull-market years when my portfolio declines. The cost of long-term gains is occasional bear markets. You can't have one without the other.
• I will recognize that diversification, rebalancing, and compounding are the only paths to long-term investment success.
• I will live fully and use the assets I've accumulated and sacrificed for over the years.
• I will rest well at night knowing I've hired a wealth manager who understands my situation, goals, and dreams and is doing everything possible to help me live beyond wealth. (That's our primary hope for you as clients.)

All of us at WJ truly appreciate the trust you place in us each and every day. We hope you have a Merry Christmas and a Happy New Year.

PAST PERFORMANCE IS NOT A GUARANTEE OF CURRENT OR FUTURE RESULTS. Examples of historical information included in this presentation do not, nor are they intended to, constitute a promise of similar future results. Specific client portfolio allocations, risks and returns can and may deviate from these examples depending on accounts and types of investments available through each account. Future market views by WJ Interests, LLC may vary significantly from the historical examples presented herein and no one receiving this summary should assume that WJ Interests, LLC will be able to replicate successful views in the future. 

Blended Portfolio is for illustrative purposes only. It is calculated by taking a weighted average of the following asset classes and represents a moderate risk portfolio:

Assumes annual rebalancing. All data represents total return for stated period.