Why should individuals focus on the return of the portfolio first and foremost relative to the required rate of return necessary to achieve their goals?
Individuals invest to achieve specific goals that are unique, and as such, must achieve a specific rate of return to achieve those goals. In our opinion, an investment program should be evaluated against the progress towards those goals. For example, if a client wishes to create an educational fund for their grandchildren, the portfolio must achieve a minimum return based on how much money is invested and when, and what the expected educational costs will be. The fact that the markets go up or down does not alter the goal or the required rate of return to achieve that goal.
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