• Darryl Rosen

Not ROI, but IOR

I saw something interesting the other day in a book about dividend stocks.

The author suggested that instead of considering ROI (with our investments), we should focus on IOR. (Huh?)

I'll explain...

As you know, ROI stands for return on investment. It's a common statistical measure used to evaluate an investment. If the ROI is 10% it would indicate you received 10 dollars in return on an investment of 100 dollars.

Easy enough, right?

For some, ROI is the only game in town; however, the author was suggesting that we instead focus on IOR.

I - Income

O - Opportunities for returns after your income needs have been met.

R - Keeping in mind the "reason" for doing this

I think this is spectacular!

Here's my interpretation. In retirement, or as you approach retirement, rate of return is far less important that you think. It's the sequence of those returns that must stand tall. Protecting what you have is your job. Minimizing volatility in your investment portfolio.

Unfortunately, to their peril, many future retirees can't break the cycle of only caring about returns so they take on too much risk.

Enter IOR!

First, focus on how you're going to pay your bills.

Consider pensions, social security, annuities and dividend paying stocks. This should form the basis of your retirement strategy.

After that floor has been set, you can consider other Opportunities for growth. Knowing your bill will get paid can open the door to more (albeit, hopefully intelligent) risk taking.

Finally, if you consider the reason why you're investing and saving in the first place, SECURiMENT, you might get more serious about your planning!

That's just the way it works!

Do you want any of the following?

  • To stop worrying about losing money. 

  • To protect your assets from principal losses.

  • To know how much income you can safely take out.

  • To make sure your money lasts your entire lifetime.

  • To grow your assets without taking too much risk.

  • To create a written retirement income plan.

  • To decrease the total fees you are paying. 

  • To understand what you are doing with your money.

You might be ready for a SECURiMENT review.

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