Why I Write This Blog (Part 3)

10) We can tell our clients what their return per unit of risk taken is: (as in the table above) which is the average compound annual total return divided by the risk. The Actual HR PC (High Rock Private Client) has had a 5 year average total return of 4.32% after fees. That includes the 2 difficult years of 2015 and 2018. But it is still better than the 60/40 benchmark portfolio average annual return and when you include the risk (the 60/40 benchmark has significantly more risk), a substantially better Return per Unit of Risk taken profile. In fact the HR PC profile is better than the Return Per Unit of Risk for than any of the other comparative indexes: S&P 500, TSX, Canadian Bond Index ETF (XBB) or the All Country World Equity Index (ACWI) ETF. 

That is because we do our homework on the risk that we take.

11) If you are not getting this kind of reporting from your advisor, what are you paying for? Most investors do not have a good understanding of the risk that they take. That is why I write this blog, because you should understand the risk that you are taking and why.

12) How much risk do we have to take? That will become clear when you create a financial plan. At High Rock, we call it a Wealth Forecast and it is inclusive in our fees. A fee-only financial planner will cost in the vicinity of $200 per hour, so it is a pretty good deal we offer with the expertise of our in-house Certified Financial Planning professional (at least semi-annual reviews included). If we do not have a plan, we cannot fully understand or appreciate the risk we need to take that is necessary to get us to our goals.

My friends, so many people out there take, or are unknowingly taking, way more risk than they have to. I have this conversation so often, but it is worth repeating: why take more risk than you have to?

You need to take risk, but you can take good, calculated risk, not just some vague advice that suggests that a good balanced 60/40 portfolio will get you 7% as some supposed experts might suggest. What is that theory?  And be wary of the cost.

In any event, I hope that I have answered the key question: I write this blog to inform the 500 or so monthly readers (and apparently growing) that there are too many folks investing out there who are under-serviced and over-charged and not fully informed of the risk factors that might keep them from reaching their financial goals. And I ask your help in spreading the word: there are safe alternatives to (as Larry Bates would call it) "Old Bay Street", where you can get to keep more of your money as it grows and compounds faster for you and at the same time limit the risk that you need to take.