By Playing Your Cards Right You Can Quickly Double Your Return on Investment...

Return on Investment (ROI) is a performance measure used to track your assets’ performance over time. Investments are also termed a portfolio of assets being a group of different investments that produce both a capital (growth in price) return and an income return (extra income). To calculate the ROI, the return of an investment is divided by the cost of the investment. ROI’s are not the be all and end all of wealth creation. It is one factor that can’t be ignored, sure but if you don’t have the other factors in place, you may find yourself going round and round in circles - not getting anywhere. The main thing to consider when calculating your return on investment is the risk you are taking and what goal you are trying to achieve by making those investments. A great starting goal would be to build your wealth to a certain amount to provide you and your loved ones financial options you don’t necessarily have today. The focus must start at your net asset position and your net asset position goal. There are multiple ways to build wealth and today:

- Your Return on Investment;

- Tax savings; and

- Cash flow surplus.

At the start of most investment journeys, tax savings and cash flow surpluses should be the main focus as having these two strategies in mind when making investment decisions will build a solid foundation for the future. Investing under the right structure or entity will put you in a solid position to ensure you save as much tax as possible from your investment returns and having a robust cash flow system ensures you are consistently investing your investment surplus.

Once your capital starts to grow, returns suddenly becomes the driving force for the growth of your net assets. A great rule for everyone to consider is the rule of 72. How it works is this: if you have an ROI of 10% per annum, what you can do is divide 72 by 10 and you’ll find that it will take you 7.2 years to double your money. This is called the your doubling cycle. So as you can imagine, the higher ROI, the faster it is that you’ll be doubling your capital.

So what is your ROI for your current net assets? Don’t forget to add the investment surplus along with the tax savings to this equation to get your Net Asset Growth per annum. Don’t get so hung up on the ROI but actually focus on your Net Asset growth along with the speed of which you double your capital.