Investors: Focus on Cash Flow, Not Returns

Investors who zero in on their portfolio’s bottom line are missing the point, and they could be pressured into making a costly mistake.

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Thanks to the financial services industry, over the decades investors have been conditioned to focus on the returns their portfolios generate, more than on cash flow. The industry has emphasized returns, as they make a great sales tool for financial professionals. But that hardly helps investors (more on the problem with historical and average returns in my next column).

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YearPortfolio 1annual returnEnding balance after$50k distributionYearPortfolio 2annual returnEnding balance after$50k distribution

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Oliver Pursche, Investment Adviser Representative
CEO, Bruderman Asset Management

Oliver Pursche is the Chief Market Strategist for Bruderman Asset Management, an SEC-registered investment advisory firm with over $1 billion in assets under management and an additional $400 million under advisement through its affiliated broker dealer, Bruderman Brothers, LLC. Pursche is a recognized authority on global affairs and investment policy, as well as a regular contributor on CNBC, Bloomberg and Fox Business. Additionally, he is a monthly contributing columnist for Forbes and, a member of the Harvard Business Review Advisory Council and a monthly participant of the NY Federal Reserve Bank Business Leaders Survey, and the author of "Immigrants: The Economic Force at our Door."