Don’t focus on investment return, Focus on net worth return

Many people now realise the importance of growing their hard-earned money to support the achievement of their various financial and life goals. However, many try to grow their money (or more specifically net worth) by paying a lot, if not all of their attention on improving investment return (ROI). While this is not wrong, it may not be the most effective and efficient way to grow your money. Why?

As you can see from the chart below, there are another 3 main drivers that will also affect the growth of your net worth other than investment return (ROI). These 3 drivers are Savings, Risks and Costs.

By focusing and working only on investment return (ROI), you will miss the opportunity to use other drivers to increase your net worth. In other words, having higher investment return alone doesn’t promise higher net worth return if the other 3 factors work against you. Therefore, in order to effectively grow your net worth, you must always look at and focus on the big picture of growing your net worth return. Only then, you will be able to identify and manage the other drivers at play to effectively increase your net worth.

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