Higher Efficiency of Investing

Efficiency of investing refers to achieving a given return at a relatively low cost.

Costs include things such as management fees, tax liabilities, and investment expenses.

All financial management firms charge some type of fee. Sometimes these fees are stated explicitly, and in other cases they are perhaps wrapped into other aspects of the return on investment.

Tax liabilities are incurred on capital gains, but may differ depending on whether taxes are levied on short-term versus long-term capital gains.

Investment expenses refers to the charges made to buy or sell securities in which investors place their capital.

The Higher Efficiency in Investment

High efficiency of investment means that a given return is achieved at a relatively low cost. For example, if an investment management firm achieves $100 of return at a cost of $1.00 (including management fees, investment expenses, and tax liabilities), it is more efficient than one that achieves the same $100 return at a cost of $5.00. Since the investor must pay this cost, the investor is left with $4.00 less with the less efficient firm than with the more efficient firm.

Convexity Wealth Management LLC achieves a high degree of efficiency in investing by having very low fees relative to other firms, investing in funds that have very low costs, and managing from an optimal tax standpoint. Our clients benefit from our high efficiency, as they will experience a lower cost for a given return.