FYI: When my father taught me how to sail, one of the first lessons was that steering an accurate course and paying attention to the compass were important. A compass has 360 degrees, and being off course by a single degree may not seem like a big deal. However, over a distance of 1,000 miles, a 1-degree mistake means that you’re a little more than 17 miles off target. For a ship bound for Boston from London, being off course by only a couple of degrees means that it might miss the state of Massachusetts entirely. It’s amazing that the early mariners ever found their destinations.
Investing poses a similar problem for many investors: How do they set the right course to achieve their financial goals? And, once set, how do they appropriately measure their progress along the way? Clients often struggle with these questions, and their confusion can frequently result in some challenging conversations for advisors. An understanding of a client’s required return can help.
Regards,
Ted
http://www.etf.com/sections/etf-industry-perspective/vanguard-how-required-returns-can-ease-clients-mind
