WLM is pleased by the response of attendees to our recent presentations on Objectives Based Investing. If you were unable to come to one of these, and are interested in attending a presentation in the future, please give us an indication of your availability as we plan for more.
As an overview, the primary goal of objectives based investing is the achievement of a specific outcome, which is of course the stated objective.
Investment objectives tend to fall into three main categories:
- Time: that is providing cash flow and/or capital requirements at a specific point in time (often referred to as liquidity or liability matching), or
- Return: that is targeting a specific rate of return, in this case a real rate of return - which put simply is the return relative to inflation, or
- Risk: that is minimising the risk (read volatility) for a given level of return.
Without a doubt real returns are the most important measure of investment outcomes for an individual. For example, it doesn’t matter if we generate 10% nominal returns (that is, without adjusting for inflation) if inflation over the same period is also 10% – as our portfolios can only purchase the same amount of goods and services, i.e. there is no ‘real’ return.
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