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Simple Interest
Heritage Investment Properties pays simple interest for your investment. There are many kinds of investments and all kinds of financial setups. Below are some comparative charts for other things people like to invest their money into. As you can see HIP Mortgage Fund’s simple interest return provides a stability more speculative investments rarely can. Bond performance charts and historical S&P 500 data is available all over the internet and newspaper business sections. Investing means doing your homework, and while we are happy to provide this brief overview – we would invite you to take the time to really learn all about simple interest investments and the alternatives.
For your consideration we have shown the seven year (2000-2007) performance of the S&P 500 and Canadian Bonds. In the first graph (S&P 500) investors must be prepared for major market corrections which have and will inevitably happen. The Canadian Bond charts are there to show you that fixed investments, while much more secure (generally) than equities, must sacrifice for this security (annual returns).
But are we not told over and over to diversify our portfolios? How will such diversity impact my portfolio? I would like you to consider this question:
How does a balanced portfolio earn 12% a year?
This example is offered as an illustration only. You will see, we’ve taken liberties with some of the anticipated returns. Your own portfolio is very likely not balanced in the manner of the example below and may differ, to a material degree, from the following example.
Fixed Investments: instruments designed to pay interest income. Generally more secure than equities. i.e. government bonds, corporate bonds, T-Bills, real-estate funds. Interest income is fully taxed. Place fixed investments in a portfolio to receive modest gains and capital preservation.
Equities: investment instruments designed to pay capital gains or dividends; taxed at a lesser rate than interest income; generally more risky than fixed investments. If preserving capital is not a concern but rather short and long term gains are important, place these (equities) in the portfolio.
A moderate (median) portfolio will generally speaking be divided between equities and fixed equally.
An example of such a portfolio would look like this:
Remember, diversification remains a concern if one is attempting to maximize growth while reducing risk. Here is what a diversified moderate portfolio might look like:
This portfolio is still broken down between 50% fixed and 50% equities, but is much more sector and geographically diversified. How would such a program earn a 12% return in a single year? Let’s take the fixed side first:
*these returns are only estimates and do not represent any actual bond, money market, or mortgage, or any mutual fund return. This is for illustration purposes only. The fixed portion has earned 5.4% this year (estimated return, not actual returns). But as the diagram has attempted to show, the fixed investments represent only HALF of the overall portfolio. Therefore, in terms of this portfolio’s overall performance, the fixed side has earned 2.7% interest for the totality of the investments.
This now means that the equities side must return 9.3% to bring our total to 12%.
Remember, since the equity portion represents only 50% (half) of the overall portfolio, and we are attempting to receive 12% annually, the real return this portion must produce is (9.3% divided by 50%) 18.6%.
The totality of the equities must be greater than or equal to 18.6% to net a 12% return under this scenario. If any of these sectors underperform, the others must make up the difference. This illustration is attempting to show some difficulties involved with receiving 12% in a single year. Remember, no service charges, transaction charges, commissions, sales charges, management expense ratios or fees of any kind have been included in the analysis. Ask yourself: are these sorts of charges affecting my bottom line?
HIP Trust offers the security of a fixed interest bearing investment, with the high returns associated with riskier equity holdings.
Want to earn 12% and pay a fixed single fee every year?
Contact us today!
Heritage Investment Properties pays simple interest for your investment. There are many kinds of investments and all kinds of financial setups. Below are some comparative charts for other things people like to invest their money into. As you can see HIP Mortgage Fund’s simple interest return provides a stability more speculative investments rarely can. Bond performance charts and historical S&P 500 data is available all over the internet and newspaper business sections. Investing means doing your homework, and while we are happy to provide this brief overview – we would invite you to take the time to really learn all about simple interest investments and the alternatives.
For your consideration we have shown the seven year (2000-2007) performance of the S&P 500 and Canadian Bonds. In the first graph (S&P 500) investors must be prepared for major market corrections which have and will inevitably happen. The Canadian Bond charts are there to show you that fixed investments, while much more secure (generally) than equities, must sacrifice for this security (annual returns).
But are we not told over and over to diversify our portfolios? How will such diversity impact my portfolio? I would like you to consider this question:
How does a balanced portfolio earn 12% a year?
This example is offered as an illustration only. You will see, we’ve taken liberties with some of the anticipated returns. Your own portfolio is very likely not balanced in the manner of the example below and may differ, to a material degree, from the following example.
Fixed Investments: instruments designed to pay interest income. Generally more secure than equities. i.e. government bonds, corporate bonds, T-Bills, real-estate funds. Interest income is fully taxed. Place fixed investments in a portfolio to receive modest gains and capital preservation.
Equities: investment instruments designed to pay capital gains or dividends; taxed at a lesser rate than interest income; generally more risky than fixed investments. If preserving capital is not a concern but rather short and long term gains are important, place these (equities) in the portfolio.
A moderate (median) portfolio will generally speaking be divided between equities and fixed equally.
An example of such a portfolio would look like this:
Remember, diversification remains a concern if one is attempting to maximize growth while reducing risk. Here is what a diversified moderate portfolio might look like:
This portfolio is still broken down between 50% fixed and 50% equities, but is much more sector and geographically diversified. How would such a program earn a 12% return in a single year? Let’s take the fixed side first:
*these returns are only estimates and do not represent any actual bond, money market, or mortgage, or any mutual fund return. This is for illustration purposes only. The fixed portion has earned 5.4% this year (estimated return, not actual returns). But as the diagram has attempted to show, the fixed investments represent only HALF of the overall portfolio. Therefore, in terms of this portfolio’s overall performance, the fixed side has earned 2.7% interest for the totality of the investments.
This now means that the equities side must return 9.3% to bring our total to 12%.
Remember, since the equity portion represents only 50% (half) of the overall portfolio, and we are attempting to receive 12% annually, the real return this portion must produce is (9.3% divided by 50%) 18.6%.
The totality of the equities must be greater than or equal to 18.6% to net a 12% return under this scenario. If any of these sectors underperform, the others must make up the difference. This illustration is attempting to show some difficulties involved with receiving 12% in a single year. Remember, no service charges, transaction charges, commissions, sales charges, management expense ratios or fees of any kind have been included in the analysis. Ask yourself: are these sorts of charges affecting my bottom line?
HIP Trust offers the security of a fixed interest bearing investment, with the high returns associated with riskier equity holdings.
Want to earn 12% and pay a fixed single fee every year?
Contact us today!
