Return Of . . . or Return On?


August 13, 2016

...we can certainly understand that keeping or maintaining our principal is going to have real value.

    

Will Rogers once said that he was not concerned about the return on his investments. He was more concerned about the return of his investments. I know this was back in the 1930's. But certainly we can take a page out of the philosophy book of Will Rogers when we begin to realize that there is some value, and perhaps a great deal of value, in getting the return of our money. If nothing else, when we have invested $10,000, it would be nice to receive that $10,000 investment when we need it.

 

I have tried hard to refocus people on being conservative in their investment strategy. I believe that we are headed into some extremely volatile, uncertain times when the only thing that seems to be certain at all is the fact that the government is staying steadily on a course of destruction. If we stay on this course, there are certainly some dark days ahead for the American economy. I believe, although we do not know exactly when those dark days will be on the visual horizon, we can certainly understand that keeping or maintaining our principal is going to have real value. 

 

As I mentioned previously, I have continually tried to help people to understand the value of preservation of principal. The sad part of this is that I have not gotten very far. There are some people who have grabbed onto this philosophy, but it is still amazing to me how, day-after-day, I get people who are concerned about the fact that since they are not losing any money, they need to take risks so that they have an opportunity to lose some of their money - their concern for earning a bit more than they are getting far outweighs their aversion to any risk of their principal.

 

If you are 35 years old, this is a fine philosophy and I don't have too much trouble with it. The problem is that I am hearing this from people who are 65, and even 75 years old, who are concerned and fed up with the fact that they are not earning "anything" in their money market accounts. My only answer to this is, of course, that you must then take risk. There is no way, and nothing out there, by which you can get even one percent more than you are getting in your money market account without taking some risk. I am amazed that people continue to ask the question "how can I get more without taking any risk?" It does not work and it never has...and it certainly is not going to work based on the current uncertainty of government policy, regulation, our tax system and the fundamentals of an economy that seems as though there may only be worse days yet ahead, not better, depending somewhat on what happens in November.

 

Can we simply refocus, be grateful for what we have accumulated and, if we are in retirement years, begin to get focused on protecting what we have accumulated (the preservation of principal), and start thinking about whether we have income (pensions, social security, charitable gift annuities) to meet most of our consumption? This is what we need to get focused on, as we move ahead in some very treacherous economic times.

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