This training video will be mind-blowing because I have never heard of any financial planner talking about this.
When it comes to investment, you will hear a salesperson telling you the schemes projected return per annum. Or you will see unit trust consultant showing charts of historical performance. He will say your portfolio could get 8% return etc.
Yes, each investment product, each Ringgit in your FD account, each unit of stock will produce a return rate. When you recognise all of these assets collectively, you get a portfolio return.
But how about your debts and mortgages? How about the equity in your home?
For example, if your overall portfolio return consists of stocks, unit trusts, FD is earning 7% return per annum. Meanwhile, you have a mortgage loan paying 4.5% interest per year. What’s your actual profit from all these? What if you liquidate your stocks and pay down your housing loan principal? How would it affect your overall return?
So here is the solution:
Why not you assess all your assets and liabilities altogether? And find the best methods to optimise the Return on your Net Worth.
I show you the details through this training below.
Discover:
- How to calculate the return on your total assets and liabilities so you can see how fast your wealth can grow
- How to optimise the return rate by wisely allocating your capital
Which means you will achieve all your financial goals sooner rather than later, even in the situation where you don’t make extra income.
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18 replies to "Return on Net Worth Analysis"
Wooow!!!It was a really a very Awesome session about the RONW analysis. Very simple and straight forwards…
Im really benefited with this method and look forward this kind of good session in future…Thanks KCLau
Hi Valli, great to hear that. It is actually utmost important to look at wealth accumulation this way. That’s how compound interest works and why rich people are getting so much richer.
Hi KC,
I missed the webinar….any recorded video I can watch to learn on this matter?
Thanks
Sam
Hi Sam, PWM members can access all recordings and downloads.
Check out the membership here.
Thx for the video. Learn another subject.???????
can’t get into your training as mentioned.
Hi Chen, for paid members of PWM, please make sure you login with your username on the right sidebar. When it shows your status as “logged in”, the full video will be shown.
Hi KC,
In your example how come the insurance is an asset? For my case I have an investment-link insurance account with Allianz and for every ringgit i put in about 50% goes to insurance and the other half for saving. Can i assume that i can calculate the returns on the savings as part of the monthly contribution at asset column? Having said that it’s not clear what’s the returns i am getting from the annual statement as it go by calculations of unit price….arghhh.
Only the cash value of an insurance policy is considered assets.
However, as you said, it is very hard to calculate the return. So generally we can estimate that the cash value portion is getting 5-7% return a year.
Hi KC, Can we have the spreedsheet? thanks
Yes. Do you see the link below all video and download buttons?
OK. Got it. Thanks very much!
Hi KC Lau. This is a great video, I learned a lot and watched repeatedly since I was making spreedsheet myself. I just noticed spreedsheet is provided haha … good for me. Thank you for detailed and clear explanation.
That is great! It means you learnt a lot by doing it. I am so glad to know it.
Awesome session KC! Loved it. Learnt something very valuable. I hope i am not learning this too late. Is an overdraft considered a liability as well? Thanks.
Yes, overdraft is a liability, when you use it.
Hi KC,
My most informative session so far but I am still struggling to work out my own RONW. I am confused why when i increase my mortgage without increase the same amount at the asset part, my RONW increase? shouldn’t it be lower as the liabilities cost increase.
When you increase the mortgage (liabilities increase).
And if you don’t make the “balance sheet” balance because your asset stay the same – it means your net worth decrease.
RONW = return / net worth.
When net worth decreases and return stay the same, RONW increase.
If reality, when you take up more mortgage, you should have more assets too.
The cash out portion is the cash that should be included in the asset column, making the “balance sheet” balance.