Please don't punch the puppy!

The Telegraph recently published the 10 ‘most hated’ jargon phrases in business:

  1. Touch base offline
  2. Blue sky thinking
  3. Punch a puppy
  4. Thought shower
  5. Thinking outside the box
  6. It’s on my radar
  7. Close of play
  8. Singing from the same hymn sheet
  9. Peel the onion
  10. To wash its own face

Read the article

I’ve heard of most of these, but some are new to me. Punch a puppy? Apparently it means ‘do something detestable but good for the business’.

Unfortunately, the financial services industry is full of jargon. In this article, we explain ‘total return investing’ and why it’s good for you.

WTF is total return investing?

Total return investing means investing for dividends, interest, growth AND lower costs – because your returns can come from any or a combination of these.

That’s why, instead of viewing your income and investments separately, we adopt a portfolio-wide approach that takes three important aspects into account:

  • Interest or dividends you withdraw or reinvest
  • Share price when purchased compared with current value
  • Cost of taxes and other expenses

In practice, here’s what we do for you

  • Asset allocation: Investing in or avoiding asset classes expected to deliver higher returns, but with higher risk
  • Diversification: Managing risk by spreading your holdings across multiple asset classes around the world
  • Wrapper selection: Minimising taxes by putting inefficient holdings in favourable accounts, and efficient holdings in taxable accounts

Balancing stocks and bonds

If you want to chase higher returns, you must accept the higher risk that goes with them.

  • Dividend-yielding stocks can be risky, because a stock grows (or falls) as the business grows (or falls). Remember, any dividends a company pays out reduce its assets and future earning power. As you will know if you have been reading our articles regularly, you will be rewarded by a well-planned and patient ‘buy, hold and re-balance’ strategy.
  • A high-yield bond is like making a loan with interest, but the quality can be poor. As markets change, you could find yourself locked into a low interest rate. And, if the borrower defaults, you lose everything.

We therefore recommend you take any risks on the stock (equity) side of your portfolio, offsetting the risks with high quality, fixed income, short-to mid-term bonds.

You’d be barking not to.

But don’t just take our word for it. Here’s how Vanguard describes total return investing:

“Many investors focus on the yield or income generated from their investments as the foundation for what they have available to spend… The challenge today, and going forward, is that yields for most investments are historically low… We conclude that moving from an income or ‘yield’ focus to a total-return approach may be the better solution.”

Source: Total-return investing: An enduring solution for low yields


Whatever happens, you need an investment strategy that will withstand the ebbs and flows of the marketplace. So:

  • Don’t just look at the anticipated income or yield
  • Don’t focus only on cashflow in retirement, if that means you pay higher tax
  • Don’t depend on stocks or bonds alone

Remember, the precise investment strategy that’s right for you will depend on your own personal circumstances.

P.S. For more unbelievable jargon, you may enjoy reading the winners of the Plain English campaign ‘Golden Bull Awards’ 2015.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100