Yeah I posted my video on this topic... but I had to post my humorous Analogy image I used in the video.
2,038 views
11 Comments
Paul N@pauln · 12d
Watched the video but figured I would make my comment here… The total return bros will simply reply that the income is spun off of the total return by selling shares so your point becomes moot. Which coincides with what that girl from BMO stated at the blossom event.
Ed
@edsam · 12d
Ironic for the annuity investor to ask about principal. It is gone once you sign the contract :)
Crystal
@crystalorchids · 12d
I think when income investors talk about the importance of total return, they are pointing out the importance of checking the health and goal of a fund before diving in. There are a number of u.s based "income" etfs like yieldboost that offer up enormous yields and distributions but the nav decay over time is striking. These are useful tools for certain goals but will not build wealth over time in that fund. If you consider the money spent rather than invested in these tools, then the distributions can be used to grow wealth quickly (weekly) in other anchor positions. If your goal is to invest in a fund and have it grow its nav while paying you a distribution, these funds are not the correct tool for the job and will cause disappointment and a lot of the negative feedback we see online about income funds being a scam. Looking at the total return of the fund over time would give the investor the information needed to determine what sort of tool/fund they are looking at and decide if it fits their goals. ------------ Here is an example of another way that I use total return in deciding which ETF to add to my portfolio: I look at how much money I will have to spend to make $100/mnth income from a fund. If I'm comparing 2 funds that serve a similar purpose and one has a higher total return but costs way more to pay me less per month, then I am choosing the one that pays more for my dollars invested assuming they are both stable-ish Canadian funds. This is because my goal is optimizing cash flow, not total return. This is why I no longer own HDIV (even though it is a great fund on total return) and I hold things like CANY (now amalgamated into EASY) and CDAY.
See the full comment section 👀Sign up for the full Blossom experience!
