Real Returns

Compounding is so miraculous that even at relatively low returns you can double and triple your money over periods of time. In order to increase your money, how could you invest it so that it outperforms the market? There are several key elements to consider: How you structure your assets and where. What kind of investments you participate in to minimize taxes and keep more of your hard earned money for yourself. The Golden Goose is built on the foundation of education and awareness. We provide information towards tax savings and techniques, helping you find more money to invest, and then build awareness towards unconventional investment opportunities.

If your investments earned 10% last year, how much did you really make? Well, the last time we checked the taxman wants to grab a piece of what you earn. One of the most significant factors investors tend to leave out when assessing their investment returns is the tax consequence. Even if you have a long-term capital gain that is only taxed at 20%, a 10% return quickly becomes 8%. And for short-term gains, the tax bite is even greater. At any rate, the question of importance for you is: “How much do I end up with at the end of the day?”

Another factor that affects returns, as we mentioned above, is inflation. So if your investments made 10% after taxes last year and inflation reduced your principal’s buying power by 2%, then you actually only made a real return of 8%. All you need to do is to take your annualized after-tax return and subtract the annual rate of inflation. How can you find out what inflation was? Every quarter the government reports the Consumer Price Index (CPI), which is what most investors use as a proxy for general inflation at the consumer level. You can find it in your local newspaper’s business section or at Statistic Canada.