Required Equity Returns
The downloadable Required Equity Returns document is a simple, yet useful way to quickly understand the impact low bond returns can have on the overall portfolio and why it might be necessary to use investments other than stocks and bonds.
- This tool shows you what the required return for equities would need to be to achieve a specific return for a traditional equity and bond portfolio.
- Unless you anticipate consistent double digit returns from equities, it will be difficult to achieve the required returns.
- Increasing equity exposure allows for potentially higher returns but introduces more downside risk.
- Certain investments outside of stocks and bonds can help increase the viability of achieving required returns without taking on excess downside risk.
- Source: Standpoint Asset Management, LLC