When it comes to promising a particular rate of return for any client or customer, one of the first things we let our customers know is that we, as their financial planning advisors, do not ever provide or earn a rate of return. Instead, we make sure that you know it’s your money earning a return on investment, not ours. Read to learn how this works.

Fun Facts about Rate of Return and Asset Allocation

It is always important to remember that your rate will be different than those of your peers, colleagues, and even other Alpha Omega Wealth clients. Each investor behaves differently based on their unique financial situation and assets, as well as their temperament.

Factors that can affect your rate of return include:

  • Time in the market
  • Date bought in
  • Date sold
  • Risk temperament
  • Loss tolerance
  • Management fees
  • Tax treatment of earnings
  • The objective for funds
  • Other factors

Don’t get fooled by advertised rates of return

Many advertised “average” Rates of Return (ROR), aren’t what they seem and amateur investors aren’t aware that this is simply a calculation. A column of “gross” rates of return advertised as being earned by the investment manager is summed up and divided by the number of years the asset has been in the given fund, stock, or investment vehicle. This is a mathematical calculation only, not an average of dollars. In Alpha Omega Wealth founder, Joe Pantozzi’s words, “It’s legal according to the SEC but don’t count on it for your future.”

When calculating potential rates of return, keep in mind that the above calculation for a gross return is subject to revision and reduction by any of the following:

  • Broker or management fees
  • Income tax, capital gains, and other taxes
  • Inflation
  • “Loss of use” or lost opportunity costs (Could you have placed the money elsewhere for equal or greater benefit?)

Leverage your legacy’s growth through asset allocation

In order to maximize your rate of return on investment, working with a financial advisor to allocate your assets among different classes is a sound financial planning strategy that helps minimize your risk while potentially maximizing your gains. Asset allocation is the strategy of dividing your investment portfolio across various asset classes like stocks, bonds, and money market securities. The asset allocation strategy allows our clients to diversify their portfolios while maximising cash flow effectively.

Work with Real Financial Advisors Instead of Charlatans

When it comes to ensuring that your assets and your legacy are protected, our infinite banking strategy at Alpha Omega Wealth arms you with an arsenal of more than 100 years of combined financial advising experience. We don’t take risks with our client’s future or their money.

Call us today to start learn more about rates of return on your path to a more secure financial future.

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